<PAGE>   1
                                                                    EXHIBIT 10.5

                               CONTINUING GUARANTY

BORROWER:  PETROQUEST ENERGY, INC.,             LENDER:  HIBERNIA NATIONAL BANK
           A LOUISIANA CORPORATION                       (TIN: 72-0210640)
           (TIN: 98-0115469)                             313 CARONDELET STREET
           400 KALISTE SALOOM RD., SUITE 3000            NEW ORLEANS, LA  70130
           LAFAYETTE, LA  70508
                    AND
           PETROQUEST ENERGY ONE, L.L.C.,
           A LOUISIANA LIMITED LIABILITY COMPANY
           (TIN: 72-1292439)
           400 KALISTE SALOOM RD., SUITE 3000
           LAFAYETTE, LA  70508

GUARANTOR: PETROQUEST ENERGY, INC.,
           A DELAWARE CORPORATION
           (TIN: 72-1440714)
           400 KALISTE SALOOM RD., SUITE 3000
           LAFAYETTE, LA  70508

--------------------------------------------------------------------------------

AMOUNT OF GUARANTY.  THE AMOUNT OF THIS GUARANTY IS UNLIMITED

DEFINITIONS. The following terms shall have the following meanings when used in
this Agreement:

AGREEMENT. The word "Agreement" means this Guaranty Agreement as this Agreement
may be amended or modified from time to time.

BORROWER. The word "Borrower" means individually, collectively and
interchangeably PetroQuest Energy, Inc., a Louisiana corporation, and PetroQuest
Energy One, L.L.C., a Louisiana limited liability company, and their successors
and assigns.

GUARANTOR. The word "Guarantor" means individually, collectively and
interchangeably PetroQuest Energy, Inc., a Delaware corporation, and its
successors and assigns, and all other persons or entities guaranteeing payment
and satisfaction of Borrower's Indebtedness as hereinafter defined.

INDEBTEDNESS. The word "Indebtedness" means individually, collectively,
interchangeably and without limitation any and all present and future loans,
loan advances, extensions of credit, obligations and/or liabilities that
Borrower may now and/or in the future owe to and/or incur in favor of Lender,
whether direct or indirect, or by way of assignment or purchase of a
participation interest, and whether absolute or contingent, voluntary or
involuntary, determined or undetermined, liquidated or unliquidated, due or to
become due, secured or unsecured, and whether Borrower may be liable
individually, jointly or solidarily with others, whether primarily or
secondarily, or as a guarantor or otherwise, and whether now existing or
hereafter arising, of every nature and kind whatsoever. The Indebtedness
includes, but is not limited to (i) all indebtedness, obligations and
liabilities arising now or in the future of Borrower and/or Guarantor to Lender
under that certain Credit Agreement dated of even date herewith, by and among
Borrower, Guarantor, and Lender, as the same may be amended and/or restated from
time to time and in effect (the "Credit Agreement"), (ii) the indebtedness of
Borrower evidenced by that certain promissory note by Borrower dated of even
date herewith, in the maximum aggregate principal amount of $50,000,000.00
payable to the order of the Lender with interest as therein provided, and all
renewals and refinancings of said promissory note. IN ADDITION, ALL INTEREST
THEREON, COSTS, EXPENSES, ATTORNEYS' FEES AND OTHER FEES AND CHARGES RELATED
THERETO UNDER BORROWER'S INDEBTEDNESS SHALL BE FULLY GUARANTEED HEREUNDER.

LENDER. The word "Lender" means Hibernia National Bank TIN: 72-0210640, its
successors and assigns, and any subsequent holder or holders of Borrower's
Indebtedness.

GUARANTEE OF BORROWER'S INDEBTEDNESS. Guarantor hereby absolutely and
unconditionally agrees to, and by these presents does hereby, solidarily
guarantee the prompt and punctual payment, performance and satisfaction of any
and all present and future Indebtedness in favor of Lender.

CONTINUING GUARANTY. THIS IS A CONTINUING GUARANTY AGREEMENT UNDER WHICH
GUARANTOR AGREES TO GUARANTEE PAYMENT OF BORROWER'S PRESENT AND FUTURE
INDEBTEDNESS IN FAVOR OF LENDER ON A CONTINUING BASIS. Guarantor's obligations
and liability under this Agreement shall be open and continuous in effect.
Guarantor intends to and does hereby guarantee at all times the prompt and
punctual payment, performance and satisfaction of all of Borrower's present and
future Indebtedness in favor of Lender. Accordingly, any payments made on
Borrower's Indebtedness will not discharge or diminish the obligations and
liability of Guarantor under this Agreement for any remaining and succeeding
Indebtedness of Borrower in favor of Lender.

JOINT, SEVERAL AND SOLIDARY LIABILITY. Guarantor's obligations and liability
under this Agreement shall be on a "solidary" or "joint and several" basis along
with Borrower to the same degree and extent as if Guarantor had been and/or will
be a co-borrower, co-principal obligor and/or co-maker of Borrower's
Indebtedness. In the event that there is more than one Guarantor under this
Agreement, or in the event that there are other guarantors, endorsers or
sureties of all or any portion of Borrower's Indebtedness,



<PAGE>   2

Guarantor's obligations and liability hereunder shall further be on a "solidary"
or "joint and several" basis along with such other guarantors, endorsers and/or
sureties.

DURATION OF GUARANTY. This Agreement and Guarantor's obligations and liability
hereunder shall remain in full force and effect until such time as this
Agreement may be cancelled or otherwise terminated by Lender under a written
cancellation instrument in favor of Guarantor (subject to the automatic
reinstatement provisions hereinbelow). It is anticipated that fluctuations may
occur in the aggregate amount of Borrower's Indebtedness guaranteed under this
Agreement and it is specifically acknowledged and agreed to by Guarantor that
reductions in the amount of Borrower's Indebtedness, even to zero ($0.00)
dollars, prior to Lender's written cancellation of this Agreement, shall not
constitute or give rise to a termination of this Agreement.

CANCELLATION OF AGREEMENT; EFFECT. Unless otherwise indicated under such a
written cancellation instrument, Lender's agreement to terminate or otherwise
cancel this Agreement shall affect only, and shall be expressly limited to,
Guarantor's continuing obligations and liability to guarantee Borrower's
Indebtedness incurred, originated and/or extended (without prior commitment)
after the date of such a written cancellation instrument; with Guarantor
remaining fully obligated and liable under this Agreement for any and all of
Borrower's Indebtedness incurred, originated, extended, or committed to prior to
the date of such a written cancellation instrument. Nothing under this Agreement
or under any other agreement or understanding by and between Guarantor and
Lender, shall in any way obligate, or be construed to obligate, Lender to agree
to the subsequent termination or cancellation of Guarantor's obligations and
liability hereunder; it being fully understood and agreed to by Guarantor that
Lender has and intends to continue to rely on Guarantor's assets, income and
financial resources in extending credit and other Indebtedness to and in favor
of Borrower, and that to release Guarantor from Guarantor's continuing
obligations and liabilities under this Agreement would so prejudice Lender that
Lender may, within its sole and uncontrolled discretion and judgment, refuse to
release Guarantor from any of its continuing obligations and liability under
this Agreement for any reason whatsoever as long as any of Borrower's
Indebtedness remains unpaid and outstanding, or otherwise.

DEFAULT. Should any event of default occur or exist under the Credit Agreement
and/or under any of Borrower's Indebtedness in favor of Lender, Guarantor
unconditionally and absolutely agrees to pay Lender the then unpaid amount of
Borrower's Indebtedness, in principal, interest, costs, expenses, attorneys'
fees and other fees and charges. Such payment or payments shall be made at
Lender's offices indicated above, immediately following demand by Lender.

GUARANTOR'S WAIVERS.  Guarantor hereby waives:

(a) Notice of Lender's acceptance of this Agreement.

(b) Presentment for payment of Borrower's Indebtedness, notice of dishonor and
of nonpayment, notice of intention to accelerate, notice of acceleration,
protest and notice of protest, collection or institution of any suit or other
action by Lender in collection thereof, including any notice of default in
payment thereof, or other notice to, or demand for payment thereof, on any
party.

(c) Any right to require Lender to notify Guarantor of any nonpayment relating
to any collateral directly or indirectly securing Borrower's Indebtedness, or
notice of any action or nonaction on the part of Borrower, Lender, or any other
guarantor, surety or endorser of Borrower's Indebtedness, or notice of the
creation of any new or additional Indebtedness subject to this Agreement

(d) Any rights to demand or require collateral security from the Borrower or any
other person as provided under applicable Louisiana law or otherwise.

(e) Any right to require Lender to notify Guarantor of the terms, time and place
of any public or private sale of any collateral directly or indirectly securing
Borrower's Indebtedness.

(f) Any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, or any action in lieu of foreclosure.

(g) Any election of remedies by Lender that may destroy or impair Guarantor's
subrogation rights or Guarantor's right to proceed for reimbursement against
Borrower or any other guarantor, surety or endorser of Borrower's Indebtedness,
including without limitation, any loss of rights Guarantor may suffer by reason
of any law limiting, qualifying, or discharging Borrower's Indebtedness.

(h) Any disability or other defense of Borrower, or any other guarantor, surety
or endorser, or any other person, or by reason of the cessation from any cause
whatsoever, other than payment in full of Borrower's Indebtedness.

(i) Any statute of limitations or prescriptive period, if at the time an action
or suit brought by Lender against Guarantor is commenced, there is any
outstanding Indebtedness of Borrower to Lender which is barred by any applicable
statute of limitations or prescriptive period.

GUARANTOR WARRANTS AND AGREES THAT EACH OF THE WAIVERS SET FORTH ABOVE IS MADE
WITH GUARANTOR'S FULL KNOWLEDGE OF ITS SIGNIFICANCE AND CONSEQUENCES, AND THAT,
UNDER THE CIRCUMSTANCES, SUCH WAIVERS ARE REASONABLE AND NOT CONTRARY TO PUBLIC
POLICY OR LAW. IF ANY SUCH WAIVER IS DETERMINED TO BE CONTRARY TO ANY APPLICABLE
LAW OR PUBLIC POLICY, SUCH WAIVER SHALL BE EFFECTIVE ONLY TO THE EXTENT
PERMITTED BY LAW.

GUARANTOR'S SUBORDINATION OF RIGHTS. In the event that Guarantor should for any
reason (a) advance or lend monies to Borrower, whether or not such funds are
used by Borrower to make payment(s) under Borrower's Indebtedness, and/or (b)
make any payment(s) to Lender or others for and on behalf of Borrower under
Borrower's Indebtedness, and/or (c) make any payment to Lender in total or
partial satisfaction of Guarantor's obligations and liabilities under this
Agreement, and/or (d) if any of Guarantor's property is used to pay or satisfy
any of Borrower's Indebtedness, Guarantor hereby agrees that any and all rights
that Guarantor may have or



                                      -2-
<PAGE>   3

acquire to collect from or to be reimbursed by Borrower (or from or by any other
guarantor, endorser or surety of Borrower's Indebtedness), whether Guarantor's
rights of collection or reimbursement arise by way of subrogation to the rights
of Lender or otherwise, shall in all respects, whether or not Borrower is
presently or subsequently becomes insolvent, be subordinate, inferior and junior
to the rights of Lender to collect and enforce payment, performance and
satisfaction of Borrower's then remaining Indebtedness, until such time as
Borrower's Indebtedness is fully paid and satisfied. In the event of Borrower's
insolvency or consequent liquidation of Borrower's assets, through bankruptcy,
by an assignment for the benefit of creditors, by voluntary liquidation, or
otherwise, the assets of Borrower applicable to the payment of claims of both
Lender and Guarantor shall be paid to Lender and shall be first applied by
Lender to Borrower's then remaining Indebtedness. Guarantor hereby assigns to
Lender all claims which it may have or acquire against Borrower or any assignee
or trustee of Borrower in bankruptcy; provided that, such assignment shall be
effective only for the purpose of assuring to Lender full payment of Borrower's
Indebtedness guaranteed under this Agreement. If now or hereafter (a) Borrower
shall be or become insolvent, and (b) Borrower's Indebtedness shall not at all
times until paid be fully secured by collateral pledged by Borrower, Guarantor
hereby forever waives and relinquishes in favor of Lender and Borrower, and
their respective successors, any claim or right to payment Guarantor may now
have or hereafter have or acquire against Borrower, by subrogation or otherwise,
so that at no time shall Guarantor be or become a "creditor" of Borrower within
the meaning of 11 U.S.C. section 547(b), or any successor provision of the
Federal bankruptcy laws.

GUARANTOR'S RECEIPT OF PAYMENTS. Guarantor further agrees to refrain from
attempting to collect and/or enforce any of Guarantor's collection and/or
reimbursement rights against Borrower (or against any other guarantor, surety or
endorser of Borrower's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Borrower's then remaining Indebtedness in
favor of Lender is fully paid and satisfied. In the event that Guarantor should
for any reason whatsoever receive any payment(s) from Borrower (or any other
guarantor, surety or endorser of Borrower's Indebtedness) that Borrower (or such
a third party) may owe to Guarantor for any of the reasons stated above,
Guarantor agrees to accept such payment(s) in trust for and on behalf of Lender,
advising Borrower (or the third party payee) of such fact. Guarantor further
unconditionally agrees to immediately deliver such funds to Lender, with such
funds being held by Guarantor over any interim period, in trust for Lender. In
the event that Guarantor should for any reason whatsoever receive any such funds
from Borrower (or any third party), and Guarantor should deposit such funds in
one or more of Guarantor's deposit accounts, no matter where located, Lender
shall have the right to attach any and all of Guarantor's deposit accounts in
which such funds were deposited, whether or not such funds were commingled with
other monies of Guarantor, and whether or not such funds then remain on deposit
in such an account or accounts. To this end and to secure Guarantor's
obligations under this Agreement, Guarantor collaterally assigns and pledges to
Lender, and grants to Lender a continuing security interest in, any and all of
Guarantor's present and future rights, title and interest in and to all monies
that Guarantor may now and/or in the future maintain on deposit with banks,
savings and loan associations and other entities (other than tax deferred
accounts with Lender), in which Guarantor may at any time deposit any such funds
that may be received from Borrower (or any other guarantor, endorser or surety
of Borrower's Indebtedness) in favor of Lender.

DEPOSIT ACCOUNTS. As collateral security for repayment of Guarantor's
obligations hereunder and under any additional guaranties previously granted or
to be granted by Guarantor in the future, and additionally as collateral
security for any present and future indebtedness of Guarantor in favor of Lender
(with the exception of any indebtedness under a consumer credit card account),
Guarantor is granting Lender a continuing security interest in any and all funds
that Guarantor may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Guarantor is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Guarantor further agrees that Lender may at any time apply any funds
that Guarantor may have on deposit with Lender or in certificates of deposit or
other deposit accounts as to which Guarantor is an account holder against the
unpaid balance of any and all other present and future obligations and
indebtedness of Guarantor to Lender, in principal, interest, fees, costs,
expenses, and attorneys' fees.

ADDITIONAL COVENANTS. Guarantor agrees that Lender may, at its sole option, at
any time, and from time to time, without the consent of or notice to Guarantor,
or any of them, or to any other party, and without incurring any responsibility
to Guarantor or to any other party, and without impairing or releasing any of
Guarantor's obligations or liabilities under this Agreement:
(a) Make additional secured and/or unsecured loans to Borrower.

(b) Discharge, release or agree not to sue any party (including, but not limited
to, Borrower or any other guarantor, surety, or endorser of Borrower's
Indebtedness), who is or may be liable to Lender for any of Borrower's
Indebtedness.

(c) Sell, exchange, release, surrender, realize upon, or otherwise deal with, in
any manner and in any order, any collateral directly or indirectly securing
repayment of any of Borrower's Indebtedness.

(d) Alter, renew, extend, accelerate, or otherwise change the manner, place,
terms and/or times of payment or other terms of Borrower's Indebtedness, or any
part thereof, including any increase or decrease in the rate or rates of
interest on any of Borrower's Indebtedness.

(e) Settle or compromise any of Borrower's Indebtedness.
(f) Subordinate and/or agree to subordinate the payment of all or any part of
Borrower's Indebtedness, or Lender's security rights in any collateral directly
or indirectly securing any such Indebtedness, to the payment and/or security
rights of any other present and/or future creditors of Borrower.

(g) Apply any payments and/or proceeds to any of Borrower's Indebtedness in such
priority or with such preferences as Lender may determine in its sole
discretion, regardless of which of Borrower's Indebtedness then remains unpaid.

(h) Take or accept any other collateral security or guaranty for any or all of
Borrower's Indebtedness.

(i) Enter into, deliver, modify, amend, or waive compliance with, any instrument
or arrangement evidencing, securing or otherwise affecting, all or any part of
Borrower's Indebtedness.




                                      -3-
<PAGE>   4

NO IMPAIRMENT OF GUARANTOR'S OBLIGATIONS. No course of dealing between Lender
and Borrower (or any other guarantor, surety or endorser of Borrower's
Indebtedness), nor any failure or delay on the part of Lender to exercise any of
Lender's rights and remedies under this Agreement or any other agreement or
agreements by and between Lender and Borrower (or any other guarantor, surety or
endorser), shall have the effect of impairing or releasing Guarantor's
obligations and liabilities to Lender, or of waiving any of Lender's rights and
remedies under this Agreement or otherwise. Any partial exercise of any rights
and remedies granted to Lender shall furthermore not constitute a waiver of any
of Lender's other rights and remedies; it being Guarantor's intent and agreement
that Lender's rights and remedies shall be cumulative in nature. Guarantor
further agrees that, should Borrower default under any of its Indebtedness, any
waiver or forbearance on the part of Lender to pursue Lender's available rights
and remedies shall be binding upon Lender only to the extent that Lender
specifically agrees to such waiver or forbearance in writing. A waiver or
forbearance on the part of Lender as to one event of default shall not
constitute a waiver or forbearance as to any other default.

NO RELEASE OF GUARANTOR. Guarantor's obligations and liabilities under this
Agreement shall not be released, impaired, reduced, or otherwise affected by,
and shall continue in full force and effect notwithstanding the occurrence of
any event, including without limitation any one or more of the following events:

(a) The death, insolvency, bankruptcy, arrangement, adjustment, composition,
liquidation, disability, dissolution, or lack of authority (whether corporate,
partnership or trust) of Borrower (or any person acting on Borrower's behalf),
or of any other guarantor, surety or endorser of Borrower's Indebtedness.

(b) Any payment by Borrower, or any other party, to Lender that is held to
constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or any such amounts or payment which, for any reason, Lender is
required to refund or repay to Borrower or to any other person.

(c) Any dissolution of Borrower, or any sale, lease or transfer of all or any
part of Borrower's assets.

(d) Any failure of Lender to notify Guarantor of the making of additional loans
or other extensions of credit in reliance on this Agreement.

AUTOMATIC REINSTATEMENT. This Agreement and Guarantor's obligations and
liabilities hereunder shall continue to be effective, and/or shall automatically
and retroactively be reinstated, if a release or discharge has occurred, or if
at any time, any payment or part thereof to Lender with respect to any of
Borrower's Indebtedness, is rescinded or must otherwise be restored by Lender
pursuant to any insolvency, bankruptcy, reorganization, receivership, or any
other debt relief granted to Borrower or to any other party to Borrower's
Indebtedness or any such security therefor. In the event that Lender must
rescind or restore any payment received in total or partial satisfaction of
Borrower's Indebtedness, any prior release or discharge from the terms of this
Agreement given to Guarantor shall be without effect, and this Agreement and
Guarantor's obligations and liabilities hereunder shall automatically and
retroactively be renewed AND/OR REINSTATED AND SHALL REMAIN IN FULL FORCE AND
EFFECT TO THE SAME DEGREE AND EXTENT AS IF SUCH A RELEASE OR DISCHARGE HAD NEVER
BEEN GRANTED. IT IS THE INTENTION OF LENDER AND GUARANTOR THAT GUARANTOR'S
OBLIGATIONS AND LIABILITIES HEREUNDER SHALL NOT BE DISCHARGED EXCEPT BY
GUARANTOR'S FULL AND COMPLETE PERFORMANCE AND SATISFACTION OF SUCH OBLIGATIONS
AND LIABILITIES; AND THEN ONLY TO THE EXTENT OF SUCH PERFORMANCE.

REPRESENTATIONS AND WARRANTIES BY GUARANTOR. Guarantor represents and warrants
that:

(a) Guarantor has the lawful power to own its properties and to engage in its
business as presently conducted.

(b) Guarantor's guaranty of Borrower's Indebtedness and Guarantor's execution,
delivery and performance of this Agreement are not in violation of any laws and
will not result in a default under any contract, agreement, or instrument to
which Guarantor is a party, or by which Guarantor or its property may be bound.

(c) Guarantor has agreed and consented to execute this Agreement and to
guarantee Borrower's Indebtedness in favor of Lender, at Borrower's request and
not at the request of Lender.

(d) Guarantor will receive and/or has received a direct or indirect material
benefit from the transactions contemplated herein and/or arising out of
Borrower's Indebtedness.

(e) This Agreement, when executed and delivered to Lender, will constitute a
valid, legal and binding obligation of Guarantor, enforceable in accordance with
its terms.

(f) Guarantor has established adequate means of obtaining information from
Borrower on a continuing basis regarding Borrower's financial condition.

(g) Lender has made no representations to Guarantor as to the creditworthiness
of Borrower.

ADDITIONAL OBLIGATIONS OF GUARANTOR. So long as this Agreement remains in
effect, Guarantor has not and will not, without Lender's prior written consent,
sell, lease, assign, pledge, hypothecate, encumber, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets. Guarantor agrees to
keep adequately informed of any facts, events or circumstances which might in
any way affect Guarantor's risks under this Agreement. Guarantor further.

ADDITIONAL DOCUMENTS; FINANCIAL STATEMENTS. Upon the reasonable request of
Lender, Guarantor will, at any time, and from time to time, execute and deliver
to Lender any and all such financial instruments and documents, and supply such
additional information, as may be necessary or advisable in the opinion of
Lender to obtain the full benefits of this Agreement. Guarantor further agrees
to provide Lender with such financial statements and other related information
at such frequencies and in such detail as Lender may reasonably request.




                                      -4-
<PAGE>   5

TRANSFER OF INDEBTEDNESS. This Agreement is for the benefit of Lender and for
such other person or persons as may from time to time become or be the holders
of all or any part of Borrower's Indebtedness. This Agreement shall be
transferable and negotiable with the same force and effect and to the same
extent as Borrower's Indebtedness may be transferable; it being understood and
agreed to by Guarantor that, upon any transfer or assignment of all or any part
of Borrower's Indebtedness, the holder of such Indebtedness shall have all of
the rights and remedies granted to Lender under this Agreement. Guarantor
further agrees that, upon any transfer of all or any portion of Borrower's
Indebtedness, Lender may transfer and deliver any and all collateral securing
repayment of such Indebtedness (including, but not limited to, any collateral
provided by Guarantor) to the transferee of such Indebtedness, and such
collateral shall secure any and all of Borrower's Indebtedness in favor of such
a transferee. Guarantor additionally agrees that, after any such transfer or
assignment has taken place, Lender shall be fully discharged from any and all
liability and responsibility to Borrower and Guarantor with respect to such
collateral, and the transferee thereafter shall be vested with all the powers
and rights with respect to such collateral.

CONSENT TO PARTICIPATION. Guarantor recognizes and agrees that Lender may, from
time to time, one or more times, transfer all or any part of Borrower's
Indebtedness through sales of participation interests in such Indebtedness to
one or more third party lenders. Guarantor specifically agrees and consents to
all such transfers and assignments, and Guarantor further waives any subsequent
notice of such transfers and assignments as may be provided under Louisiana law.
Guarantor additionally agrees that the purchaser of a participation interest in
Borrower's Indebtedness will be considered as the absolute owner of a percentage
interest of such Indebtedness and that such a purchaser will have all of the
rights granted under any participation agreement governing the sale of such a
participation interest. Guarantor waives any rights of offset that Guarantor may
have against Lender and/or any purchaser of such a participation interest, and
Guarantor unconditionally agrees that either Lender or such a purchaser may
enforce Guarantor's obligations and liabilities under this Agreement,
irrespective of the failure or insolvency of Lender or any such purchaser.

NOTICES. Any notice provided in this Agreement must be in writing and will be
considered as given on the day it is delivered by hand or deposited in the U.S.
mail, postage prepaid, addressed to the person to whom the notice is to be given
at the address shown above or at such other addresses as any party may designate
to the other in writing. If there is more than one Guarantor under this
Agreement, notice to any Guarantor shall constitute notice to all Guarantors.

ADDITIONAL GUARANTIES. Guarantor recognizes and agrees that Guarantor may have
previously granted, and may in the future grant, one or more additional
guaranties of Borrower's Indebtedness in favor of Lender. Should this occur, the
execution of this Agreement and any additional guaranties on the part of
Guarantor will not be construed as a cancellation of this Agreement or any of
Guarantor's additional guaranties; it being Guarantor's full intent and
agreement that all such guaranties of Borrower's Indebtedness in favor of Lender
shall remain in full force and effect and shall be cumulative in nature and
effect.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

AMENDMENT. No amendment, modification, consent or waiver of any provision of
this Agreement, and no consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing signed by a duly authorized
officer of Lender, and then shall be effective only as to the specific instance
and for the specific purpose for which given.

APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
Lender in the State of Louisiana. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Louisiana.

CAPTION HEADINGS. Caption headings of the sections of this Agreement are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Agreement, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.

SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid
or unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable. This Agreement shall be construed and
enforceable as if the illegal, invalid or unenforceable provision had never
comprised a part of it, and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement, a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and legal,
valid and enforceable.

SUCCESSORS AND ASSIGNS BOUND. Guarantor's obligations and liabilities under this
Agreement shall be binding upon Guarantor's successors, heirs, legatees,
devisees, administrators, executors and assigns.

WAIVE JURY. Guarantor and Lender hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either against the other.




                                      -5-
<PAGE>   6

THE GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND
AGREES TO ITS TERMS. IN ADDITION, GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS
EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS GUARANTY TO LENDER AND
THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED. NO FORMAL ACCEPTANCE BY LENDER
IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY IS DATED DECEMBER
21, 2000.


GUARANTOR:

PETROQUEST ENERGY, INC.,
A DELAWARE CORPORATION

X  /s/ Charles T. Goodson
----------------------------------------
Name:  Charles T. Goodson
Title: Chairman of the Board and Chief
       Executive Officer



                                      -6-