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                                                                    EXHIBIT 10.4

                               FIRST AMENDMENT TO
                      AMENDED AND RESTATED CREDIT AGREEMENT


         THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the
"Amendment") is made and entered into effective as of November 6, 2003, 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, ("Bank One"); and UNION BANK OF
CALIFORNIA, N.A., a national banking association, ("UBOC").

                                    RECITALS:

         WHEREAS, Borrower, Guarantor, Bank One and UBOC entered into an Amended
and Restated Credit Agreement dated May 14, 2003 (which as the same may 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, Borrower, Guarantor, Bank One and UBOC 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) Definitions. 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:

                           "Aggregate Outstanding Debt" means the sum of all (i)
                  Aggregate Outstanding Credit Exposure; and (ii) the amount of
                  loans and advances made to Borrower under the Subordinated
                  Credit Agreement, all of which is part of the Subordinated
                  Indebtedness."

                           "Subordinated Credit Agreement" means that certain
                  $20,000,000 Senior Second Lien Secured Credit Agreement dated
                  November 6, 2003 among the Borrower and Subordinated Lenders,
                  as the same may be amended from time to time.

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                           "Subordinated Lenders" means Macquarie Americas Corp.
                  a Delaware corporation, individually and as agent, and the
                  other financial institutions who are or become lenders under
                  the Subordinated Credit Agreement.

                           "Subordinated Indebtedness" means the obligation to
                  repay the Subordinated Lenders pursuant to the terms of the
                  Subordinated Credit Agreement.

                           "Subordination Agreement" means the Subordination and
                  Intercreditor Agreement dated November 6, 2003 executed among
                  Borrower, Guarantor, Agent, and Subordinated Lenders in favor
                  of the Agent for the ratable benefit of the Lenders, as
                  amended, supplemented, restated or otherwise modified from
                  time to time.

                           "Tax Adjusted Gross Margin" means Borrower's total
                  revenue from any source minus an amount equal to the sum of
                  Borrower's total lease operating expenses, production taxes,
                  state and federal taxes paid in cash and hedge settlements.

                           "Unutilized Availability" means an amount equal to
                  one hundred thirty percent of the Borrowing Base in effect
                  from time to time; minus the Aggregate Outstanding Debt.

                  (b) Definitions. The following defined terms set forth in
         Article I of the Credit Agreement are hereby amended as follows:

                           "Consolidated Current Assets shall mean the total of
                  the consolidated current assets of Borrower and Guarantor,
                  plus Unutilized Availability; provided, however, in
                  determining consolidated current assets, such determination
                  shall not include non-cash gains, losses or charges required
                  (a) under SFAS 133 or (b) under SFAS 143."

                           "Obligations" means all unpaid principal of and
                  accrued and unpaid interest on the Loans, the Rate Management
                  Obligations, all accrued and unpaid fees and all expenses,
                  reimbursements, indemnities and other obligations of the
                  Borrower to the Lenders or to any Lender, the Agent, the LC
                  Issuer or any indemnified party arising under the Loan
                  Documents.

                           "Security Agreement" means that certain Security
                  Agreement (Accounts) now or hereafter executed by the
                  Guarantor, the Borrower or any of their Subsidiaries in favor
                  of the Agent, for the ratable benefit of the Lenders, as they
                  may be amended or modified and in effect from time to time.

         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:



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                  (a) Section 2.21.1 Issuance, of the Credit Agreement is hereby
         amended by deleting the section in its entirety and substituting the
         following:

                           2.21.1 Issuance. Except as provided below, the LC
                  Issuer hereby agrees, on the terms and conditions set forth in
                  this Agreement, to issue standby and commercial letters of
                  credit (each, a "Facility LC") and to renew, extend, increase,
                  decrease or otherwise modify each Facility LC ("Modify," and
                  each such action a "Modification"), from time to time from and
                  including the date of this Agreement and prior to the Facility
                  Termination Date upon the request of the Borrower; provided
                  that an LC Issuer shall not be obligated to issue a Facility
                  LC in favor of any Subordinated Lender; and immediately after
                  each such Facility LC is issued or Modified, (i) the aggregate
                  amount of the outstanding LC Obligations shall not exceed
                  $5,000,000 and (ii) the Aggregate Outstanding Credit Exposure
                  shall not exceed the lesser of (a) the Aggregate Commitment
                  and (b) the Borrowing Base. No Facility LC shall have an
                  expiry date later than the earlier of (x) the fifth Business
                  Day prior to the Facility Termination Date and (y) one year
                  after its issuance; provided, however, that any Facility LC
                  with a one-year tenor may provide for the renewal thereof for
                  additional one-year periods (which shall in no event extend
                  beyond the fifth Business Day prior to the Facility
                  Termination Date) unless the LC Issuer provides prior notice
                  of non-renewal to the beneficiary of such Facility LC.

                  (b) A new Section 5.28 Subordinated Indebtedness is hereby
         added to the Credit Agreement as follows:

                           "5.28. Subordinated Indebtedness, The Obligations
                  constitute senior indebtedness of the Borrower and Guarantor
                  and are entitled to the benefits of the subordination
                  provisions of all outstanding Subordinated Indebtedness."

                  (c) Section 6.2 Use of Proceeds, of the Credit Agreement is
         hereby amended by deleting the section in its entirety and substituting
         the following:

                           "6.2. Use of Proceeds. The Borrower will, and will
                  cause the Guarantor and each of their Subsidiaries to, use the
                  proceeds of the Credit Extensions (x) for the acquisition,
                  development and exploration of Oil & Gas Properties; (y) for
                  working capital requirements; and (z) Letters of Credit. The
                  Borrower will not, and will cause the Guarantor and each of
                  their Subsidiaries not to, use any of the proceeds of the
                  Credit Extensions: (a) to purchase or carry any "margin stock"
                  (as defined in Regulation U) or extend credit to others for
                  the purpose of purchasing or repurchasing or carrying margin
                  stock; and (b) except as permitted hereby, to cancel or make a
                  payment in connection with any obligation arising from the
                  Subordinated Credit Agreement including, without limiting the
                  generality of the foregoing, the repayment of the Subordinated
                  Indebtedness."

                  (d) Section 6.3. Notice of Default, of the Credit Agreement is
         hereby amended by deleting the section in its entirety and substituting
         the following:



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                           "6.3. Notice of Default. The Borrower will, and will
                  cause each Subsidiary to, give prompt notice in writing to the
                  Lenders of the occurrence of any Default or Unmatured Default
                  and of any other development, financial or otherwise, which
                  could reasonably be expected to have a Material Adverse
                  Effect. Furthermore the Borrower will, and will cause each
                  Subsidiary to, give prompt notice in writing to the Lenders of
                  the occurrence of any "Event of Default" as defined in the
                  Subordinated Credit Agreement."

                  (e) Section 6.11 Indebtedness, of the Credit Agreement is
         hereby amended by deleting the section in its entirety and substituting
         the following:

                           "6.11. Indebtedness. The Guarantor and the Borrower
                  will not, nor will it permit any Subsidiary to, create, incur
                  or suffer to exist any Indebtedness, except:

                                    (i) the Credit Extensions;

                                    (ii) Indebtedness existing on the date
                           hereof and described in Schedule 6.11;

                                    (iii) Indebtedness arising under Rate
                           Management Transactions permitted under Section 6.25;

                                    (iv) Indebtedness among the Guarantor, the
                           Borrower or any of their Subsidiaries;

                                    (v) Indebtedness associated with bonds or
                           surety obligations required by any governmental or
                           regulatory authority or prior owner in connection
                           with owning or operating its Oil and Gas Properties
                           in the ordinary course of business;

                                    (vi) unsecured accounts payable incurred in
                           the ordinary course of Business which remain unpaid
                           after the expiration of ninety (90) days beyond
                           invoice date or are being contested in good faith and
                           as to which such reserve as is required by Agreement
                           Accounting Principles has been made;

                                    (vii) Indebtedness not to exceed at any one
                           time $500,000 related to purchase money financing;

                                    (viii) Indebtedness relating to Capitalized
                           Lease Obligations not to exceed at any one time
                           $500,000;

                                    (ix) Indebtedness relating to net production
                           imbalances not to exceed at any one time $1,000,000;



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                                    (x) Indebtedness relating to overriding
                           royalties and other interests carved out of
                           production incurred in the ordinary course of oil and
                           gas exploration and development projects;

                                    (xi) Indebtedness associated with the
                           financing of premiums for business insurance of the
                           Guarantor, the Borrower and their Subsidiaries;

                                    (xii) Contingent Obligations of the
                           Guarantor in connection with guarantees of the
                           obligations of the Borrower and its Subsidiaries in
                           connection with owning and operating Oil and Gas
                           Properties in the ordinary course of business.

                                    (xiii) Non-Recourse Indebtedness not to
                           exceed $25,000,000; and

                                    (xiv) the Subordinated Indebtedness."

                  (f) Section 6.15 Liens, of the Credit Agreement is hereby
         amended by deleting the section in its entirety and substituting the
         following:

                           "6.15. Liens. The Borrower will not, nor will it
                  permit any Subsidiary to, create, incur, or suffer to exist
                  any Lien in, of or on the Property of the Borrower or any of
                  its Subsidiaries, except:

                                    (i) Liens for taxes, assessments or
                           governmental charges or levies on its Property if the
                           same shall not at the time be delinquent or
                           thereafter can be paid without penalty, or are being
                           contested in good faith and by appropriate
                           proceedings and for which adequate reserves in
                           accordance with Agreement Accounting Principles shall
                           have been set aside on its books;

                                    (ii) Liens imposed by Law, such as
                           carriers', warehousemen's and mechanics' liens and
                           other similar liens arising in the ordinary course of
                           business which secure payment of obligations not more
                           than ninety (90) days past due, or are being
                           contested in good faith and by appropriate
                           proceedings and for which adequate reserves in
                           accordance with Agreement Accounting Principles shall
                           have been set aside on its books;

                                    (iii) Liens arising out of pledges or
                           deposits under worker's compensation Laws,
                           unemployment insurance, old age pensions, or other
                           social security or retirement benefits, or similar
                           legislation;

                                    (iv) utility easements, building
                           restrictions and such other encumbrances or charges
                           against real property as are of a nature generally
                           existing with respect to properties of a similar
                           character and which do not in any material way affect
                           the marketability of the same or interfere with the
                           use thereof in the business of the Borrower or its
                           Subsidiaries;



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                                    (v) Liens existing on the date hereof in
                           favor of the Minerals Management Service;

                                    (vi) Liens in favor of the Agent, for the
                           benefit of the Lenders, granted pursuant to any
                           Collateral Document and other Liens expressly
                           permitted under the Collateral Documents;

                                    (vii) Liens in favor of operators and
                           non-operators under joint operating agreements or
                           similar contractual arrangements arising in the
                           ordinary course of the business of the Borrower or
                           its Subsidiaries to secure amounts owing, which
                           amounts are not more than ninety (90) days past due
                           or are being contested in good faith by appropriate
                           proceedings, if such reserve as may be required by
                           Agreement Accounting Principles shall have been made
                           therefor;

                                    (viii) Liens under production sales
                           agreements, division orders, operating agreements,
                           and other agreements customary in the oil and gas
                           business for processing, producing, and selling
                           Hydrocarbons securing obligations not constituting
                           Indebtedness and provided that such Liens do not
                           secure obligations to deliver Hydrocarbons at some
                           future date without receiving full payment therefor
                           within ninety (90) days of delivery.

                                    (ix) Liens in favor of any of the Lenders in
                           connection with Rate Management Transactions; and

                                    (x) Liens in favor of the Subordinated
                           Lenders securing the Subordinated Indebtedness, which
                           are inferior in right and time to the Liens in favor
                           of the Lenders."

                  (g) Section 6.24 General and Administrative Expense Limitation
        of the Credit Agreement is hereby amended by deleting the section in its
        entirety and substituting the following:

                  "6.24. General and Administrative Expense Limitation. Borrower
         will not permit the Consolidated G&A to exceed:

                  (a) four million five hundred thousand dollars ($4,500,000) in
the aggregate for the last six calendar months of 2003; or

                           for each calendar quarter beginning January 1, 2004,
                  the lesser of (i) two million five hundred thousand
                  ($2,500,000) or (ii) thirty-one percent (31%) of the Tax
                  Adjusted Gross Margin; provided, however, if Borrower's
                  Consolidated G&A for any quarter exceed 31% of the Tax
                  Adjusted Gross Margin, the maximum allowable Consolidated G&A
                  for Borrower during the immediately succeeding quarter will be
                  18% of the Tax Adjusted Gross margin; and provided further
                  that a



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                  breach of clause (ii) of this Section 6.24(b) can only form
                  the basis of a Default if Borrower's Consolidated G&A exceed
                  (x) 31% of the Tax Adjusted Gross Margin during any quarter
                  and (y) 18% of the Tax Adjusted Gross Margin during the
                  immediately succeeding quarter; and provided further that,
                  notwithstanding anything in this Section 6.24(b) to the
                  contrary, the Consolidated G&A of Borrower shall not exceed
                  35% of the Tax Adjusted Gross Margin. "

                  (h) Section 6.25 Rate Management Transactions, of the Credit
         Agreement is hereby amended by deleting the section in its entirety and
         substituting the following:

                           "6.25. Rate Management Transactions. Neither the
                  Borrower nor any Subsidiary will be a party to or in any
                  manner be liable on any Rate Management Transactions except:

                                    (i) contracts entered into with the purpose
                           of fixing prices on oil or gas expected to be
                           produced by the Borrower or its Subsidiaries,
                           provided that at all times: (a) no such contract
                           fixes a price for a term of more than twenty-four
                           (24) months for any such contract to which any Lender
                           or any Affiliate thereof is a counter-party and
                           thirty-six (36) months for any such contract for
                           which any Subordinated Lender or any Affiliate
                           thereof is a counter-party; or (b) the aggregate
                           monthly production covered by all such contracts
                           (determined, in the case of contracts that are not
                           settled on a monthly basis, by a monthly pro-ration
                           acceptable to the Agent) for any single month does
                           not in the aggregate exceed seventy-five percent
                           (75%) of the aggregate Projected Oil and Gas
                           Production of Borrower and its Subsidiaries
                           anticipated to be sold in the ordinary course of such
                           Person's business for such month; (c) each such
                           contract is with a counterparty or has a guarantor of
                           the obligation of the counterparty who (unless such
                           counterparty is a Lender, a Subordinated Lender, or
                           one of their respective Affiliates) at the time the
                           agreement is made has (or whose holding company has)
                           long-term obligations rated AA or AA2 or better,
                           respectively, by either S&P or Moody's or is an
                           investment grade-rated industry participant. As used
                           in this subsection, the term "Projected Oil and Gas
                           Production" means the projected production of oil or
                           gas from the "proved, developed, and producing"
                           category set forth in the most recent Reserve Report
                           (measured by volume unit or BTU equivalent, not sales
                           price) for the term of the contracts or a particular
                           month, as applicable, from Oil and Gas Properties and
                           interests owned by the Guarantor, the Borrower and
                           their Subsidiaries which are located in or offshore
                           of the United States of America and which have
                           attributable to them proved oil or gas reserves, as
                           such production is projected in the most recent
                           report delivered pursuant to Section 6.1, after
                           deducting projected production from any properties or
                           interests sold or under contract for sale that had
                           been included in such report and after adding
                           projected production from any properties or interests
                           that had not been reflected in such report but that
                           are reflected in a separate or supplemental



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                           reports meeting the requirements of Section 6.1 above
                           and otherwise are satisfactory to the Agent;

                                    (ii) contracts entered into by the Borrower
                           or any Subsidiary with the purpose and effect of
                           fixing interest rates on a principal amount of
                           indebtedness of such Person that is accruing interest
                           at a variable rate, provided that (a) the aggregate
                           notional amount of such contracts never exceeds
                           seventy-five percent (75%) of the anticipated
                           outstanding principal balance of the indebtedness to
                           be hedged by such contracts or an average of such
                           principal balances calculated using a generally
                           accepted method of matching interest swap contracts
                           to declining principal balances, (b) the floating
                           rate index of each such contract generally matches
                           the index used to determine the floating rates of
                           interest on the corresponding indebtedness to be
                           hedged by such contract, and (c) each such contract
                           is with a counterparty or has a guarantor of the
                           obligation of the counterparty who (unless such
                           counterparty is a Lender, a Subordinated Lender, or
                           one of their Affiliates) at the time the contract is
                           made has (or whose company has) long-term obligations
                           rated AA or AA2 or better, respectively, by either
                           S&P or Moody's or is an investment grade-rated
                           industry participant.

                                    (iii) Existing Rate Management Transactions
                           with Credit Lyonnais Rouse Derivatives and
                           Entergy-Koch Trading LP as more particularly
                           described on Schedule 6.25; and

                                    (iv) contracts entered into pursuant to
                           Section 6.17 of the Subordinated Credit Agreement
                           with the purpose of fixing prices on oil or gas
                           expected to be produced by the Borrower or its
                           Subsidiaries.

                           Within ninety (90) days of the date hereof, the
                           Borrower shall establish and shall at all times
                           thereafter maintain Rate Management Transactions
                           consisting of contracts entered into with the purpose
                           of fixing prices on oil or gas expected to be
                           produced by the Guarantor, the Borrower and their
                           Subsidiaries, covering at least fifty percent (50%)
                           of the aggregate volumes of Hydrocarbons listed in
                           the "proved, developed, and producing" category set
                           forth in the most recent Reserve Report, determined
                           on a rolling twelve month basis."

                  (i) A new Section 6.31.4 to the Credit Agreement is hereby
         added as follows:

                           "6.31.4. Limitation on Aggregate Outstanding Debt.
                  The Borrower shall not permit Aggregate Outstanding Debt to be
                  greater than one hundred and thirty percent (130%) of the
                  Borrowing Base in effect from time to time."

                  (j) A new Section 6.32 to the Credit Agreement is hereby added
         as follows:



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                      "6.32. Subordinated Indebtedness. The Borrower will
                  promptly provide the Agent with copies of all documentation,
                  notices and reports provided by or on behalf of the Borrower,
                  Guarantor or any Subsidiary to the Subordinated Lenders. On or
                  before the tenth (10th) day of each calendar month, the
                  Borrower shall deliver to the Agent a certificate, executed by
                  an Authorized Officer of the Borrower, setting forth the
                  outstanding balance of the Subordinated Indebtedness as of the
                  last day of the preceding month. The Borrower will not, and
                  will not permit the Guarantor or any Subsidiary to, make any
                  (i) payments on the principal amount of any Subordinated
                  Indebtedness; (ii) payments of interest on the Subordinated
                  Indebtedness if (a) the Aggregate Outstanding Credit Exposure
                  of the Borrower exceeds eighty percent (80%) of the Borrowing
                  Base in effect from time to time or (b) after the occurrence
                  of a Unmatured Default or a Default; (iii) amendment or
                  modification to the Subordinated Credit Agreement or any other
                  agreement evidencing or governing any Subordinated
                  Indebtedness without the prior written consent of the Agent;
                  or (iv) directly or indirectly voluntarily prepay, defease or
                  in substance defease, purchase, redeem, retire or otherwise
                  acquire, any portion of the Subordinated Indebtedness without
                  the prior written consent of the Agent."

                  (k) A new Section 6.33 to the Credit Agreement is hereby added
         as follows:

                  "Section 6.33 Change of Operators. If pursuant to the terms of
                  the Subordinated Credit Agreement, the Subordinated Lenders
                  request that the Borrower or any Subsidiary replace or vote to
                  replace the operator of any of the Oil & Gas Properties, the
                  Borrower will not and will not permit any Subsidiary to do so
                  without the prior written consent of Lenders, which consent
                  will not be unreasonably withheld."

                  (l) Section 7.3 of the Credit Agreement is hereby amended by
         deleting the section in its entirety and substituting the following:

                      "7.3. The material breach by the Borrower of any of the
                  terms or provisions of Article VI Sections 6.2, 6.10, 6.11,
                  6.12, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18, 6.19, 6.20, 6.24,
                  6.25, 6.26, 6.27, 6.28, 6.29, 6.30, 6.31 or 6.32 and/or the
                  occurrence of an "Event of Default" under the Subordinated
                  Credit Agreement provided, however, any amendment,
                  modification or waiver by the Subordinated Lenders of any such
                  "Event of Default" shall not constitute an amendment,
                  modification or waiver hereunder."

                  (m) A new Section 7.20 to the Credit Agreement is hereby added
         as follows:

                      "7.20 The Borrower shall fail to timely pay any of its
                  obligations to the Subordinated Lender under the Subordinated
                  Credit Agreement or any other default shall occur thereunder."

                  (n) Section 8.1 Acceleration, of the Credit Agreement is
         hereby amended by deleting the section in its entirety and substituting
         the following:


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                           "(i) If any Default described in Section 7.6, 7.7 or
                  7.20 occurs with respect to the Borrower or any of its
                  Subsidiaries, the obligations of the Lenders to make Loans
                  hereunder and the obligation and power of the LC Issuer to
                  issue Facility LCs shall automatically terminate and the
                  Obligations shall immediately become due and payable without
                  any election or action on the part of the Agent, the LC Issuer
                  or any Lender and the Borrower will be and become thereby
                  unconditionally obligated, without any further notice, act or
                  demand, to pay to the Agent an amount in immediately available
                  funds, which funds shall be held in the Facility LC Collateral
                  Account, equal to the excess of (x) the amount of LC
                  Obligations at such time, over (y) the amount on deposit in
                  the Facility LC Collateral Account at such time which is free
                  and clear of all rights and claims of third parties and has
                  not been applied against the Obligations (such difference, the
                  "Collateral Shortfall Amount"). If any other Default occurs,
                  the Required Lenders (or the Agent with the consent of the
                  Required Lenders) may (a) terminate or suspend the obligations
                  of the Lenders to make Loans hereunder and the obligation and
                  power of the LC Issuer to issue Facility LCs, or declare the
                  Obligations to be due and payable, or both, whereupon the
                  Obligations shall become immediately due and payable, without
                  presentment, demand, protest, notice of intent to accelerate,
                  notice of acceleration or notice of any kind, all of which the
                  Borrower hereby expressly waives, and (b) upon notice to the
                  Borrower and in addition to the continuing right to demand
                  payment of all amounts payable under this Agreement, make
                  demand on the Borrower to pay, and the Borrower will,
                  forthwith upon such demand and without any further notice or
                  act, pay to the Agent the Collateral Shortfall Amount, which
                  funds shall be deposited in the Facility LC Collateral
                  Account.

                           (ii) If at any time while any Default is continuing,
                  the Agent determines that the Collateral Shortfall Amount is
                  greater than zero, the Agent may make demand on the Borrower
                  to pay, and the Borrower will, forthwith upon such demand and
                  without any further notice or act, pay to the Agent the
                  Collateral Shortfall Amount, which funds shall be deposited in
                  the Facility LC Collateral Account.

                           (iii) The Agent may at any time or from time to time
                  after funds are deposited in the Facility LC Collateral
                  Account, apply such funds to the payment of the Obligations or
                  any other amounts as shall from time to time have become due
                  and payable by the Borrower to the Lenders or the LC Issuer
                  under the Loan Documents.

                           (iv) At any time while any Default is continuing,
                  neither the Borrower nor any Person claiming on behalf of or
                  through the Borrower shall have any right to withdraw any of
                  the funds held in the Facility LC Collateral Account. After
                  all of the Obligations have been indefeasibly paid in full and
                  the Aggregate Commitment has been terminated, any funds
                  remaining in the Facility LC Collateral Account shall be
                  returned by the Agent to the Borrower or paid to whomever may
                  be legally entitled thereto at such time.



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<PAGE>

                           (v) If, within ten (10) days after acceleration of
                  the maturity of the Obligations or termination of the
                  obligations of the Lenders to make Loans and the obligation
                  and power of the LC Issuer to issue Facility LCs hereunder as
                  a result of any Default (other than any Default as described
                  in Section 7.6 or 7.7 with respect to the Borrower) and before
                  any judgment or decree for the payment of the Obligations due
                  shall have been obtained or entered, the Required Lenders (in
                  their sole discretion) shall so direct, the Agent shall, by
                  notice to the Borrower, rescind and annul such acceleration
                  and/or termination."

         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) Copies of all documentation executed by Borrower and
         Guarantor in connection with the Subordinated Credit Agreement and the
         Subordinated Indebtedness, certified by an Authorized Officer of
         Borrower that such documents are true, correct and complete:

                  (e) The Subordination Agreement, duly executed by Borrower,
         Guarantor and the Subordinated Lenders;

                  (f) 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;



                                      -11-
<PAGE>


                  (g) 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;

                  (h) The legal opinion of counsel to Borrower and Guarantor, in
         form and substance satisfactory to the Agent and its counsel;

                  (i) The Security Agreement, executed by Borrower and
         Guarantor, in a form satisfactory to the Agent, the Lenders and their
         counsel with respect to the accounts therein described, which are a
         part of the Collateral; 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; and

                  (c) After giving affect to this Amendment, no event has
         occurred and is continuing which constitutes a Default or Unmatured
         Default.

         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.




                                      -12-
<PAGE>

                  (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
omission 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.



                                      -13-
<PAGE>

         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]




                                      -14-
<PAGE>



         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




                                      -15-
<PAGE>




                                       "LENDERS"

                                       BANK ONE, NA,
                                       As the Agent, a Lender and LC Issuer


                                       By: /s/ Charles Kingswell-Smith
                                          -------------------------------------
                                            Charles Kingswell-Smith
                                            Director




                                      -16-
<PAGE>




                                           UNION BANK OF CALIFORNIA, N.A.
                                           As a Lender


                                           By: /s/ Damien Meiburger
                                               ---------------------------------
                                           Name: Damien Meiburger
                                                 -------------------------------
                                           Title: Senior Vice President
                                                  ------------------------------

                                      -17-