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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  For the fiscal year ended December 31,
    2010
  Commission file number: 001-34635
  PostRock Energy
    Corporation
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

27-0981065(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)210 Park Avenue
    Oklahoma City, Oklahoma(Address of Principal
    Executive Offices)

73102(Zip Code)   Registrants telephone number, including area code:
 (405) 600-7704
 Securities Registered Pursuant to Section 12(b) of the
    Exchange Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share

The NASDAQ Stock Market LLC   Securities Registered Pursuant to Section 12(g) of the
    Exchange Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company þ   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 PART IITEM 1.

BUSINESS


1ITEM 1A.

RISK FACTORS


16ITEM 1B.

UNRESOLVED STAFF COMMENTS


33ITEM 2.

PROPERTIES


33ITEM 3.

LEGAL PROCEEDINGS


33PART IIITEM 5.

MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES


38ITEM 6.

SELECTED FINANCIAL DATA


39ITEM 7.

MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


40ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


56ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


58ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


59ITEM 9A.

CONTROLS AND PROCEDURES


59ITEM 9B.

OTHER INFORMATION


61PART IIIITEM 10.

DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT
    AND CORPORATE GOVERNANCE


61ITEM 11.

EXECUTIVE COMPENSATION


61ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


61ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE


61ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES


61PART IVITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES


61EX-10.20EX-10.21EX-21.1EX-23.1EX-23.2EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1   i




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##### Table of Contents



GLOSSARY
    Bbl

BarrelMBbls

Thousand barrelsMcf

Thousand cubic feetMMcf

Million cubic feetBcf

Billion cubic feetMMcf/d

Million cubic feet per dayMcfe

Thousand cubic feet equivalent. To determine Mcfe, oil is
    converted on the basis of one barrel of oil equaling six Mcf of
    gas equivalent. This ratio reflects energy content only. Given
    recent commodity prices, the price for an Mcf of natural gas is
    less than 1/20th the price for a barrel of oil.MMcfe

Million cubic feet equivalentBtu

British thermal unitMMBtu

Million British thermal units    ii




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PART I  ITEM 1.
    BUSINESS  Background
    Business
    Segments
        Production
      2
   1




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Appalachian Basin Asset Sale
  Interstate
    Pipeline
  and/or
      Form 10-K.
  Description
    of Production Properties and Projects
  Properties
   2




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Projects
  160-acre 80-acre
 3




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Risk Factors  Risks Related to
    Our Business  Our identified drilling location
    inventories will be developed over several years, making them
    susceptible to uncertainties that could materially alter the
    occurrence or timing of their drilling, resulting in temporarily
    lower cash from operations, which may impact our results of
    operations.
  110-140 Mmcf
      Oil and
    Gas Data
  Preparation
    of Reserve Reports
   4




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Estimated
    Reserves
    Gas (Bcf)


Oil (MMbbl)


Total (Bcfe)


%Proved reservesDeveloped


117.0



0.73



121.4



90
%Undeveloped


13.5



0.01



13.5



10
%Total proved reserves


130.5



0.74



134.9



100
%   Risk
    Factors  Risks Related to Our Business 
    Our estimated reserves are based on many assumptions that may
    prove to be inaccurate.
   5




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Production
    Volumes, Sales Prices and Production Costs
    Year Ended December 31,2010


2009


2008Net ProductionGas (Bcf)


19.2



21.2



21.3Oil (Bbls)


76,583



83,015



69,812Gas equivalent (Bcfe)


19.7



21.7



21.7Oil and Natural Gas Sales ($ in thousands)Gas sales

$
82,153


$
75,106


$
156,051Oil sales


5,783



4,787



6,448Total oil and natural gas sales

$
87,936


$
79,893


$
162,499Avg Sales Price (unhedged)Gas ($ per Mcf)

$
4.27


$
3.54


$
7.32Oil ($ per Bbl)

$
75.51


$
57.66


$
92.36Gas equivalent ($ per Mcfe)

$
4.47


$
3.68


$
7.47Avg Sales Price (hedged)(1)Gas ($ per Mcf)

$
5.92


$
8.11


$
7.02Oil ($ per Bbl)

$
78.63


$
69.93


$
90.44Gas equivalent ($ per Mcfe)

$
6.09


$
8.19


$
7.18Operating expenses ($ per Mcfe)Production costs (including gathering costs but excluding
    production and property taxes)

$
1.99


$
2.11


$
2.49Production and property taxes

$
0.39


$
0.47


$
0.55Net Revenue ($ per Mcfe)

$
2.08


$
1.10


$
4.43     (1)
    
    Data includes the effects of our commodity derivative contracts
    that do not qualify for hedge accounting.  Year Ended December 31,2010


2009


2008Realized gain (loss) on hedgesGas Hedges

$
31,693


$
97,130


$
(6,254
)Oil Hedges


239



1,018



(134
)Total

$
31,932


$
98,148


$
(6,388
)  6




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Year Ended December 31, 2010


Year Ended December 31, 2009MidContinent(1)


Appalachia


MidContinent(1)


AppalachiaProductionNatural Gas (Bcfe)


18.3



0.9



20.3



0.9Oil (Bbls)


64,326



12,257



64,583



18,432Total production (Bcfe)


18.7



1.0



20.7



1.0Average Sales PricesNatural Gas (per Mcfe)

$
4.21


$
5.57


$
3.31


$
8.30Oil (per bbl)


76.27



71.53



59.30



51.90Total average sales price (per Mcfe)


4.38



6.03



3.44



8.34Production Costs (per Mcfe)

$
1.98


$
2.30


$
2.05


$
3.25     (1)
    
    MidContinent includes the Cherokee Basin and our minor oil
    producing properties in Oklahoma.  Producing
    Wells and Acreage
    Gas


Oil


TotalGross


Net


Gross


Net


Gross


NetDecember 31, 2008


2,873



2,825.0



82



80.2



2,955



2,905.2December 31, 2009


2,442



2,397.8



48



43.7



2,490



2,441.5December 31, 2010(1)


3,052



2,995.2



47



44.2



3,099



3,039.4     (1)
    
    Increase from 2009 is primarily due to 163 wells completed
    in 2010 and the inclusion of non-producing wells that are
    mechanically capable of production that we omitted in prior
    years.  AcreageProducing(1)


Nonproducing


TotalGross


Net


Gross


Net


Gross


NetDecember 31, 2008(2)(3)


464,702



446,537



208,224



180,707



672,926



627,244December 31, 2009(2)(4)


446,129



432,008



139,018



130,161



585,147



562,169December 31, 2010(5)(6)


436,566



424,778



90,498



86,392



527,064



511,170     (1)
    
    Includes acreage held by production or the payment of shut in
    royalties under the terms of the lease.(2)
    
    Includes acreage in the states of Kansas, Oklahoma, New York,
    Pennsylvania, and West Virginia.(3)
    
    Includes approximately 37,723 gross and 31,565 net
    acres attributable to various farm-out agreements or other
    mechanisms in the Appalachian Basin. Approximately
    6,912 net acres were earned and approximately
    24,653 net acres were unearned under these agreements as of
    December 31, 2008. There are certain drilling or payment
    obligations that must be met before this unearned acreage is
    earned.(4)
    
    Includes approximately 37,805 gross and 31,883 net
    acres attributable to various farm-out agreements or other
    mechanisms in the Appalachian Basin. Approximately
    10,058 net acres are earned and approximately
    21,825 net acres are unearned under these agreements as of
    December 31, 2009. There are certain drilling or payment
    obligations that must be met before this unearned acreage is
    earned. 7




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(5)
    
    Includes approximately 29,512 gross and 28,928 net
    acres attributable to various farm-out agreements or other
    mechanisms in the Appalachian Basin. Approximately
    10,700 net acres are earned and approximately
    22,799 net acres are unearned under these agreements at
    December 31, 2010. There are certain drilling or payment
    obligations that must be met before this unearned acreage is
    earned.(6)
    
    Includes acreage in the states of Kansas, Oklahoma, West
    Virginia, and New York.    Drilling
    Activities
    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2010


2009


2008Gross


Net


Gross


Net


Gross


NetExploratory wells drilledProductive


















1



1Dry










1



1



1



1Development wells drilledProductive


163



163



4



2.5



339



338Dry






















Wells plugged and abandoned


(2
)


(2
)


(11
)


(11
)


(17
)


(17
)Wells divested


(7
)


(7
)Wells acquired(1)










9



1.6



551



514.5Net increase in capable wells


154



154



3



(5.9
)


875



837.5Recompletion of old wellsCapable of production


29



29











14



14     (1)
    
    For 2008, includes 54.5 net and 56 gross oil wells
    capable of production acquired in Seminole County, Oklahoma. The
    remainder of the wells acquired in 2008 were part of the
    PetroEdge acquisition.    Gas
    Gathering
  Year EndedDecember 31,2010


2009Throughput (Mmcf)Cherokee Basin


23,584



26,083Appalachian Basin


933



956   Third-Party
    Gathering
   8




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Exploration
    and Production
  General
  day-to-day
      Leases
          Marketing
    and Major Customers
  Production
   9




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Interstate
    Pipeline
      Capacity

Time Period57,568 Dth/d

Through October 31, 201244,636 Dth/d

November 1, 2012 through October 31, 201543,171 Dth/d

November 1, 2015 through October 31, 201712,000 Dth/d

November 1, 2009 through October 31, 20136,900 Dth/d

November 1, 2002 through September 30, 20176,857 Dth/d

November 1, 2002 through March 31, 2017   Commodity
    Derivative Activities
  Risk Factors  Our
    hedging activities could result in financial losses or reduce
    our income
  Competition
  Production
   10




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Interstate
    Pipeline
    Title
  Production
    Properties
    rights-of-way
  Pipeline
    Rights-of-Way
  rights-of-way
  rights-of-way rights-of-way right-of-way right-of-way rights-of-way,
  rights-of-way
 11




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Seasonality
  Production
    Interstate
    Pipeline
    Government
    Regulation
  and/or
  We
    are subject to increasing governmental regulations and
    environmental risks that may cause us to incur substantial
    cost and Pipeline integrity programs and repairs may
    impose significant costs and liabilities on us.
    Environmental
    Matters
   12




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We are subject to increasing
    governmental regulations and environmental risks that may cause
    us to incur substantial costs; We may incur
    significant costs and liabilities in the future resulting from a
    failure to comply with new or existing environmental and
    operational safety regulations or an accidental release of
    hazardous substances into the environment; We may
    face unanticipated water and other waste disposal costs;
    and Recent and future environmental laws and regulations
    may significantly limit, and increase the cost of, our
    exploration, production and transportation operations.
  Production
  and/or
    Interstate
    Pipelines and FERC Regulation
  The KPC Pipeline is subject to
    regulation by FERC, which could have an adverse impact on our
    ability to establish transportation rates that would allow us to
    recover the full cost of operating the KPC pipeline, plus a
    reasonable return, which may affect our business and results of
    operations.
   13




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We could be subject to penalties
    and fines if we fail to comply with FERC regulations.
  A change in the
    jurisdictional characterization of some of our gathering assets
    by federal, state or local regulatory agencies or a change in
    policy by those agencies may result in increased regulation of
    our gathering assets, which may indirectly cause our revenues to
    decline and operating expenses to increase
  State
    Regulation of Gathering Pipelines
        Sales
    of Natural Gas
   14




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Interstate
    Pipeline Safety
    Employees
    Where To
    Find Additional Information
      
    Audit Committee Charter;
    Compensation Committee Charter;
    Nominating and Corporate Governance Committee Charter; and
    Code of Business Conduct and Ethics. 15




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ITEM 1A.
    RISK
    FACTORS  Risks
    Related to Our Business
  Energy
    prices are very volatile, and if commodity prices remain low or
    decline, our revenues, profitability and cash flows will be
    adversely affected. A sustained or further decline in oil and
    gas prices may adversely affect our business, financial
    condition or results of operations and our ability to fund our
    capital expenditures and meet our financial
    commitments.
    
    domestic and foreign supply of and demand for oil and gas;
    price and level of foreign imports of oil and gas;
    level of consumer product demand;
    weather conditions;
    overall domestic and global economic conditions;
    political and economic conditions in oil and gas producing
    countries, including embargoes and continued hostilities in the
    Middle East and other sustained military campaigns, acts of
    terrorism or sabotage;
    actions of the Organization of Petroleum Exporting Countries and
    other state-controlled oil companies relating to oil price and
    production controls;
    the impact of the U.S. dollar exchange rates on oil and gas
    prices;
    technological advances affecting energy consumption;
    domestic and foreign governmental regulations and taxation;
    the impact of energy conservation efforts;
    the costs, proximity and capacity of gas pipelines and other
    transportation facilities; and
    the price and availability of alternative fuels.    
    reduce the amount of cash flow available for capital
    expenditures, including for the drilling of wells and the
    construction of infrastructure to transport the gas it produces;
    negatively impact the value of our reserves because declines in
    oil and gas prices would reduce the amount of oil and gas we can
    produce economically;
    reduce the drilling and production activity of our third-party
    customers and increase the rate at which our customers shut in
    wells;
    potentially reduce gas available for transport on the KPC
    Pipeline; and
    limit our ability to borrow money or raise additional capital. 16




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We may
    be required to write-down the carrying value of our
    assets.
    We
    have reduced debt but we remain highly leveraged.
        
    our ability to obtain additional debt or equity financing, if
    necessary, for drilling, expansion, working capital and other
    business needs may be impaired or such financing may not be
    available on favorable terms;
    a substantial decrease in our revenues as a result of lower oil
    and gas prices, decreased production or other factors could make
    it difficult for us to pay our liabilities. Any failure by us to
    meet these obligations could result in litigation,
    non-performance by contract counterparties or bankruptcy; 17




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
    our funds available for operations and future business
    opportunities will be reduced by that portion of our cash flow
    required to make principal or interest payments on our debt;
    we may be more vulnerable to competitive pressures or a downturn
    in our business or the economy generally; and
    our flexibility in responding to changing business and economic
    conditions may be limited.  and/or
  Our
    credit agreements have substantial restrictions and financial
    covenants that restrict our business and financing
    activities.
      An
    increase in market interest rates will cause our debt service
    obligations to increase.
    We may
    be unable to pass through all of our costs and expenses for
    gathering and compression to royalty owners under our gas
    leases, which would reduce our net income and cash
    flows.
  and/or
 18




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We are
    exposed to trade credit risk in the ordinary course of our
    business activities.
  and/or
  Unless
    we replace the reserves that we produce, our existing reserves
    and production will decline, which would adversely affect our
    revenues, profitability and cash flows.
    Our
    estimated reserves are based on assumptions that may prove to be
    inaccurate. Any material inaccuracies in these reserve estimates
    or underlying assumptions will materially affect the quantities
    and present value of our reserves.
    
    a constant level of future oil and gas prices;
    geological conditions;
    production levels;
    capital expenditures;
    operating and development costs;
    the effects of governmental regulations and taxation; and
    availability of funds.     19




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
    the actual prices we receive for oil and gas;
    our actual operating costs in producing oil and gas;
    the amount and timing of actual production;
    the amount and timing of our capital expenditures;
    supply of and demand for oil and gas; and
    changes in governmental regulations or taxation.  Extractive
    Activities  Oil and Gas
  Drilling
    for and producing oil and gas is a costly and high-risk activity
    with many uncertainties that could adversely affect our
    financial condition or results of operations.
    
    high costs, shortages or delivery delays of drilling rigs,
    equipment, labor or other services;
    adverse weather conditions;
    difficulty disposing of water produced as part of the coal bed
    methane production process;
    equipment failures or accidents;
    title problems;
    pipe or cement failures or casing collapses;
    compliance with environmental and other governmental
    requirements;
    environmental hazards, such as gas leaks, oil spills, pipeline
    ruptures and discharges of toxic gases;
    lost or damaged oilfield drilling and service tools;
    loss of drilling fluid circulation;
    unexpected operational events and drilling conditions;
    increased risk of wellbore instability due to horizontal
    drilling;
    unusual or unexpected geological formations;
    natural disasters, such as fires and floods;
    blowouts, surface craterings and explosions; and
    uncontrollable flows of oil, gas or well fluids.   20




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The
    revenues of our interstate pipeline business are generated under
    contracts that must be renegotiated periodically.
      
    competition by other pipelines, including the change in rates or
    upstream supply of existing pipeline competitors, as well as the
    proposed construction by other companies of additional pipeline
    capacity in markets served by our interstate pipeline;
    changes in state regulation of local distribution companies,
    which may cause them to negotiate short-term contracts or turn
    back their capacity when their contracts expire;
    reduced demand and market conditions in the areas we serve;
    the availability of alternative energy sources or natural gas
    supply points; and
    regulatory actions.  Our
    hedging activities could result in financial losses or reduce
    our income.
       21




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
    a counterparty may not perform its obligation under the
    applicable derivative instrument;
    there may be a change in the expected differential between the
    underlying commodity price in the derivative instrument and the
    actual price received; and
    the steps we take to monitor our derivative financial
    instruments may not detect and prevent violations of our risk
    management policies and procedures.  Because
    of our lack of asset and geographic diversification, adverse
    developments in our operating areas would adversely affect our
    results of operations.
    The
    oil and gas industry is highly competitive and we may be unable
    to compete effectively with larger companies, which may
    adversely affect our results of operations.
       22




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Our
    business involves many hazards and operational risks, some of
    which may not be fully covered by insurance. If a significant
    accident or event occurs that is not fully insured, our
    operations and financial results could be adversely
    affected.
    
    damage to wells, pipelines, related equipment and surrounding
    properties caused by hurricanes, tornadoes, floods, fires and
    other natural disasters and acts of terrorism;
    inadvertent damage from construction, farm and utility equipment;
    leaks of gas or oil spills as a result of the malfunction of
    equipment or facilities;
    fires and explosions; and
    other hazards that could also result in personal injury and loss
    of life, pollution and suspension of operations.      Certain
    of our undeveloped acreage is subject to leases or other
    agreements that may expire in the near future.
    Our
    identified drilling location inventories will be developed over
    several years, making them susceptible to uncertainties that
    could materially alter the occurrence or timing of their
    drilling, resulting in temporarily lower cash from operations,
    which may impact our results of operations.
   23




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We may
    incur losses as a result of title deficiencies in the properties
    in which we invest.
      A
    change in the jurisdictional characterization of some of our
    gathering assets by federal, state or local regulatory agencies
    or a change in policy by those agencies may result in increased
    regulation of our gathering assets, which may indirectly cause
    our revenues to decline and operating expenses to
    increase.
       24




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The
    KPC Pipeline is subject to regulation by FERC, which could have
    an adverse impact on our ability to establish transportation
    rates that would allow us to recover the full cost of operating
    the KPC pipeline, plus a reasonable return, which may affect our
    business and results of operations.
          
    rates and charges for natural gas transportation services;
    certification and construction of new facilities; 25




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
    extension or abandonment of services and facilities;
    maintenance of accounts and records;
    relationships between pipelines and certain affiliates;
    terms and conditions of service;
    depreciation and amortization policies;
    acquisition and disposition of facilities; and
    initiation and discontinuation of services.        We
    could be subject to penalties and fines if we fail to comply
    with FERC regulations
     26




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We
    could be subject to regulations adopted by the Commodity Futures
    Trading Commission pursuant to the Dodd-Frank Act.
    We may
    incur significant costs and liabilities in the future resulting
    from a failure to comply with new or existing environmental and
    operational safety regulations or an accidental release of
    hazardous substances into the environment.
        We may
    face unanticipated water and other waste disposal
    costs.
   27




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
    we cannot obtain future permits from applicable regulatory
    agencies;
    water of lesser quality or requiring additional treatment is
    produced;
    our wells produce excess water;
    new laws and regulations require water to be disposed in a
    different manner; or
    costs to transport the produced water to the disposal wells
    increase.    Pipeline
    integrity programs and repairs may impose significant costs and
    liabilities on us.
    
    perform ongoing assessments of pipeline integrity;
    identify and characterize applicable threats to pipeline
    segments that could impact a high consequence area;
    improve data collection, integration and analysis;
    repair and remediate the pipeline as necessary; and
    implement preventive and mitigating actions.   28




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
    our estimate does not include the costs of repairs, remediation
    or preventative or mitigating actions that may be determined to
    be necessary as a result of the testing program, which could be
    substantial;
    additional regulatory requirements that are enacted could
    significantly increase the amount of these expenditures;
    the actual implementation costs may be materially higher than
    our estimates because of increased industry-wide demand for
    contractors and service providers and the related increase in
    costs; or
    failure to comply with DOT regulations and any corresponding
    deadlines, which could subject us to penalties and fines.  Recent
    and future environmental laws and regulations may significantly
    limit, and increase the cost of, our exploration, production and
    transportation operations.
      and/or
 29




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and/or
    Our
    ability to grow and to increase our profitability may depend in
    part on our ability to make acquisitions. Acquisitions are
    subject to a number of risks.
  and/or
  If
    third-party pipelines and other facilities interconnected to our
    gas pipelines become unavailable to transport or produce gas,
    our revenues and cash flows could be adversely
    affected.
    Failure
    of the gas that we gather on our gas gathering systems to meet
    the specifications of interconnecting interstate pipelines could
    result in curtailments by the interstate
    pipelines.
    We do
    not own all of the land on which our pipelines are located or on
    which we may seek to locate pipelines in the future, which could
    disrupt our operations and growth.
  right-of-way
 30




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rights-of-way rights-of-way rights-of-way. rights-of-way
  Our
    success depends on our key management personnel, the loss of any
    of whom could disrupt our business.
    Risks
    Related to the Ownership of Our Common Stock
  The
    price of our common stock has been and may continue to
    experience volatility.
    Our
    charter and bylaws contain provisions that may make it more
    difficult for a third party to acquire control of us, even if a
    change in control would result in the purchase of our
    stockholders common stock at a premium to the market price
    or would otherwise be beneficial to our
    stockholders.
    We do
    not expect to pay dividends on our common stock for the
    foreseeable future.
   31




---



##### Table of Contents



White
    Deer Energy L.P. and its affiliates (White Deer)
    beneficially own approximately 70% of our common stock after
    giving effect to the exercise of their outstanding warrants,
    giving White Deer influence and control in corporate
    transactions and other matters, including a sale of our
    Company.
        Substantial
    sales of our common stock by White Deer could cause our stock
    price to decline.
    Forward-Looking
    Statements
      
    current weak economic conditions;
    volatility of oil and gas prices;
    benefits or effects of the Recombination;
    increases in the cost of drilling, completion and gas gathering
    or other costs of developing and producing our reserves;
    our debt covenants; 32




---



##### Table of Contents




    access to capital, including debt and equity markets;
    results of our hedging activities;
    drilling, operational and environmental risks; and
    regulatory changes and litigation risks.  Form 10-K,
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES  Form 10-K.
  Administrative
    Facilities
      sub-lease
    month-to-month
  ITEM 3.
    LEGAL
    PROCEEDINGS   33




---



##### Table of Contents



Federal
    Class Action Securities Litigation
  Michael
    Friedman, individually and on behalf of all others similarly
    situated v. Quest Energy Partners LP, Quest Energy GP LLC,
    Quest Resource Corporation, Jerry Cash, and David E. Grose, Case
    No. 08-cv-936-M,
    U.S. District Court for the Western District of Oklahoma, filed
    September 5, 2008
  James
    Jents, individually and on behalf of all others similarly
    situated v. Quest Resource Corporation, Jerry Cash, David
    E. Grose, and John Garrison, Case
    No. 08-cv-968-M,
    U.S. District Court for the Western District of Oklahoma, filed
    September 12, 2008
  J. Braxton
    Kyzer and Bapui Rao, individually and on behalf of all others
    similarly situated v. Quest Energy Partners LP, Quest
    Energy GP LLC, Quest Resource Corporation and David E. Grose,
    Case
    No. 08-cv-1066-M,
    U.S. District Court for the Western District of Oklahoma, filed
    October 6, 2008
  Paul
    Rosen, individually and on behalf of all others similarly
    situated v. Quest Energy Partners LP, Quest Energy GP LLC,
    Quest Resource Corporation, Jerry Cash, and David E. Grose, Case
    No. 08-cv-978-M, U.S. District Court for the Western District of
    Oklahoma, filed September 17, 2008
  Rule 10b-5 and/or
 34




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##### Table of Contents



Federal
    Individual Securities Litigation
  Bristol
    Capital Advisors v. Quest Resource Corporation, Inc., Jerry
    Cash, David E. Grose, and John Garrison, Case
    No. CIV-09-932,
    U.S. District Court for the Western District of Oklahoma, filed
    August 24, 2009
  and/or
  J. Steven
    Emerson, Emerson Partners, J. Steven Emerson Roth IRA, J. Steven
    Emerson IRA RO II, and Emerson Family Foundation v. Quest
    Resource Corporation, Inc., Quest Energy Partners L.P.,
    Jerry Cash, David E. Grose, and John Garrison, Case
    No. 5:09-cv-1226-M,
    U.S. District Court for the Western District of Oklahoma, filed
    November 3, 2009
  and/or and/or
  Federal
    Derivative Cases
  James
    Stephens, derivatively on behalf of nominal defendant Quest
    Resource Corporation v. William H. Damon III, Jerry Cash,
    David Lawler, David E. Grose, James B. Kite Jr., John C.
    Garrison and Jon H. Rateau, Case
    No. 08-cv-1025-M,
    U.S. District Court for the Western District of Oklahoma, filed
    September 25, 2008
  and/or
 35




---



##### Table of Contents



William
    Dean Enders, derivatively on behalf of nominal defendant Quest
    Energy Partners, L.P. v. Jerry D. Cash, David E.
    Grose, David C. Lawler, Gary Pittman, Mark Stansberry, J. Philip
    McCormick, Douglas Brent Mueller, Mid Continent Pipe &
    Equipment, LLC, Reliable Pipe & Equipment, LLC,
    RHB Global, LLC, RHB, Inc., Rodger H. Brooks, Murrell,
    Hall, McIntosh & Co. PLLP, and
    Eide Bailly LLP, Case
    No. CIV-09-752-M,
    U.S. District Court for the Western District of Oklahoma, filed
    July 17, 2009
  and/or
  State
    Court Derivative Cases
  Tim
    Bodeker, derivatively on behalf of nominal defendant Quest
    Resource Corporation v. Jerry Cash, David E. Grose, Bob G.
    Alexander, David C. Lawler, James B. Kite, John C. Garrison, Jon
    H. Rateau and William H. Damon III, Case
    No. CJ-2008-9042,
    District Court of Oklahoma County, State of Oklahoma, filed
    October 8, 2008
  William
    H. Jacobson, derivatively on behalf of nominal defendant Quest
    Resource Corporation v. Jerry Cash, David E. Grose,
    David C. Lawler, James B. Kite, Jon H. Rateau, Bob G. Alexander,
    William H. Damon III, John C. Garrison, Murrell, Hall,
    McIntosh & Co., LLP, and Eide Bailly, LLP,
    Case No. CJ-2008-9657,
    District Court of Oklahoma County, State of Oklahoma, filed
    October 27, 2008
  Amy
    Wulfert, derivatively on behalf of nominal defendant Quest
    Resource Corporation, v. Jerry D. Cash, David C. Lawler,
    Jon C. Garrison, John H. Rateau, James B. Kite Jr., William H.
    Damon III, David E. Grose, N. Malone Mitchell III, and Bryan
    Simmons, Case
    No. CJ-2008-9042 
    consolidated December 30, 2008, District Court of Oklahoma
    County, State of Oklahoma (Original Case No. CJ-2008-9624, filed
    October 24, 2008)
  Jacobson Wulfert In re Quest Resource
    Corporation Shareholder Derivative Litigation No. CJ-2008-9042.
  Royalty
    Owner Class Action
  Hugo
    Spieker, et al. v. Quest Cherokee, LLC, Case
    No. 07-1225-MLB,
    U.S. District Court for the District of Kansas, filed
    August 6, 2007
   36




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##### Table of Contents



Litigation
    Related to Oil and Gas Leases
  Billy
    Bob Willis, et al. v. Quest Resource Corporation, et al.,
    Case
    No. CJ-09-063,
    District Court of Nowata County, State of Oklahoma, filed
    April 28, 2009
  Larry
    Reitz, et al. v. Quest Resource Corporation, et al., Case
    No. CJ-09-076,
    District Court of Nowata County, State of Oklahoma, filed
    May 22, 2009
   37




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information
    Quarter Ended

High


LowMarch 31, 2010(1)

$
22.98


$
8.12June 30, 2010

$
11.02


$
4.51September 30, 2010

$
5.89


$
2.75December 31, 2010

$
5.20


$
3.39     (1)
    
    Represents the high and low prices for the period from
    March 8, 2010 through March 31, 2010.    Dividends
    Unregistered
    Sales of Equity Securities
    Issuer
    Purchases of Equity Securities
   38




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K. Form 10-K/A
  PredecessorMarch 6 to


January 1 toDecember 31,


March 5,


Years Ended December 31,2010


2010


2009


2008


2007


2006(In thousands, except per share data)Statement of Operations DataRevenuesOil and gas sales

$
69,277


$
18,659


$
79,893


$
162,499


$
105,285


$
72,410Gathering revenue


4,771



1,076



7,760



8,704



6,667



5,014Pipeline revenue


8,380



1,749



18,428



19,472



3,186



Total revenues


82,428



21,484



106,081



190,675



115,138



77,424Costs and expensesOil and gas production


38,329



8,645



55,961



66,218



56,299



38,489Interstate pipeline operating


5,195



1,110



6,573



7,635



1,094



General and administrative


20,705



5,735



41,723



28,269



21,023



8,655Depreciation, depletion and amortization


18,683



4,164



47,802



70,445



39,782



27,011(Gain) loss on sale of assets


(13,495
)






25



(24
)


322



(3
)Impairments










268,630



298,861







Loss (recovery) from misappropriation of funds


(1,592
)






(3,412
)






2,000



6,000Total costs and expenses


67,825



19,654



417,302



471,404



120,520



80,152Operating income (loss)


14,603



1,830



(311,221
)


(280,729
)


(5,382
)


(2,728
)Other income (expense)Gain from derivative financial instruments


47,870



25,246



48,122



66,145



1,961



52,690Gain on forgiveness of debt


2,909



















Other income (expense)


(24
)


(4
)


108



305



(9
)


99Interest expense, net


(20,137
)


(5,336
)


(29,329
)


(25,373
)


(43,628
)


(20,567
)Total other income and (expense)


30,618



19,906



18,901



41,077



(41,676
)


32,222Income (loss) before income taxes


45,221



21,736



(292,320
)


(239,652
)


(47,058
)


29,494Income tax expense






















Net income (loss)


45,221



21,736



(292,320
)


(239,652
)


(47,058
)


29,494Net (income) loss attributable to noncontrolling interests






(9,958
)


147,398



72,268



2,904



14Net income (loss) attributable to controlling interest


45,221



11,778



(144,922
)


(167,384
)


(44,154
)


29,508Preferred stock dividends and accretion


(2,307
)


















Net income (loss) available to common shareholders

$
42,914


$
11,778


$
(144,922
)

$
(167,384
)

$
(44,154
)

$
29,508Net income (loss) available to common shareholders per share:Basic

$
5.29


$
0.37


$
(4.55
)

$
(6.20
)

$
(1.97
)

$
1.33Diluted

$
4.62


$
0.36


$
(4.55
)

$
(6.20
)

$
(1.97
)

$
1.33Balance Sheet Data (at end of period)Total assets

$
296,812


$
310,234


$
283,655


$
650,176


$
672,537


$
467,936Other non-current liabilities

$
13,831


$
17,148


$
15,121


$
10,152


$
9,249


$
12,288Long-term debt, net of current maturities

$
209,721


$
20,251


$
19,295


$
343,094


$
233,046


$
225,245Redeemable Preferred Stock

$
50,622


$



$



$



$



$
  39




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K, Form 10-K.
    Overview
    of Our Company
        Strategy
    Financial
    and Operating Highlights
    
    recombined our predecessor entities to form PostRock Energy
    Corporation;
    completed a $60 million White Deer investment;
    closed the first phase of our Appalachia Basin asset sale in
    December 2010 and the second phase in January 2011 for a
    combined $39.7 million;
    increased capital spending to $28.1 million as compared
    with $8.4 million in 2009;
    completed and connected 163 new natural gas and oil wells in the
    Cherokee Basin and returned 292 wells in the basin to
    production; 40




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##### Table of Contents




    restructured and simplified our credit agreements to reduce
    borrowing costs, extend maturities, and improve covenants;
    decreased debt by $109.1 million from December 31,
    2009 with another $9.3 million of principal reduction in
    January 2011 utilizing proceeds from the second phase of the
    Appalachia sale;
    generated net income available to common stockholders of
    $54.7 million as compared with a net loss of
    $144.9 million for 2009;
    generated gains on derivative financial instruments of
    $73.1 million (including unrealized
    mark-to-market
    gains of $41.1 million) as compared with gains of
    $48.1 million (including unrealized
    mark-to-market
    losses of $50.0 million) for 2009; and
    increased total liquidity to $37.2 million as of
    December 31, 2010, consisting of year-end cash balances
    plus funds available under credit facilities, as compared with
    $20.9 million at December 31, 2009.  Material
    Events and Transactions During 2010
  Recombination
  Form 10-K
  White
    Deer Investment
  1 2 Liquidity and
    Capital Resources below Form 10-K
  Credit
    Restructuring
  Liquidity and Capital Resources
  Appalachian
    Basin Asset Sale
  Business  Business
    Segments  Production  Appalachian Basin
    Asset Sale
  How We
    Evaluate Our Operations
   41




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##### Table of Contents



General
    Trends and Outlook
  Realized
    Prices
    Quantitative and Qualitative
    Disclosures About Market Risk Form 10-K
  Supply
    and Demand of Oil and Gas
  degree-days
  sub-national
 42




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##### Table of Contents



Drilling
    Programs
    Risk Factors  Risks Related to
    Our Business  Our identified drilling location
    inventories will be developed over several years, making them
    susceptible to uncertainties that could materially alter the
    occurrence or timing of their drilling, resulting in temporarily
    lower cash from operations, which may impact our results of
    operations.
  Results
    of Operations
  2010


2009


2008(In thousands)RevenuesOil and natural gas sales

$
87,936


$
79,893


$
162,499Gathering revenue


5,847



7,760



8,704Total production segment


93,783



87,653



171,203Pipeline segment


10,129



18,428



19,472Total revenues

$
103,912


$
106,081


$
190,675Operating profit (loss)Production(1)

$
40,972


$
(222,839
)

$
(254,221
)Pipeline(2)


309



(50,071
)


1,761Total operating profit (loss)


41,281



(272,910
)


(252,460
)General and administrative expenses


26,440



41,723



28,269Recovery of misappropriation funds


(1,592
)


(3,412
)


Total operating income (loss)

$
16,433


$
(311,221
)

$
(280,729
)     (1)
    
    Includes impairment of production properties of
    $215.1 million and $298.9 million in 2009 and 2008,
    respectively. The impairment of $215.1 million in 2009
    includes the impairment of our gathering system of
    $112.2 million.(2)
    
    Includes impairment of our pipeline assets of $53.6 million
    in 2009. 43




---



##### Table of Contents



Year
    ended December 31, 2010 compared to the year ended
    December 31, 2009
    Year EndedDecember 31,


Increase/2010


2009


(Decrease)($ in thousands except per unit data)Production SegmentOil and gas sales

$
87,936


$
79,893


$
8,043



10.1
%Gathering revenue

$
5,847


$
7,760


$
(1,913
)


(24.7
)%Production operating costs

$
46,974


$
55,961


$
(8,987
)


(16.1
)%Depreciation, depletion and amortization

$
19,409


$
39,438


$
(20,029
)


(50.8
)%Gain (loss) on sale of assets

$
13,572


$
(25
)

$
13,597



543.9
%Impairment

$



$
215,068


$
(215,068
)


*
%Production DataTotal production (Mmcfe)


19,685



21,733



(2,048
)


(9.4
)%Average daily production (Mmcfe/d)


53.9



59.5



(5.6
)


(9.4
)%Average Sales Price per Unit (Mcfe)

$
4.47


$
3.68


$
0.79



21.5
%Average Unit Costs per McfeProduction operating costs

$
2.39


$
2.58


$
(0.19
)


(7.4
)%Depreciation, depletion and amortization

$
0.99


$
1.81


$
(0.82
)


(45.3
)%Pipeline SegmentPipeline revenue

$
10,129


$
18,428


$
(8,299
)


(45.0
)%Pipeline operating expense

$
6,305


$
6,573


$
(268
)


(4.1
)%Depreciation and amortization expense

$
3,438


$
8,364


$
(4,926
)


(58.9
)%Loss on sale of assets


77







77



*
%Impairment

$



$
53,562


$
(53,562
)


*
%     *
    
    Not meaningful  Oil and Gas Sales
  Gathering Revenue
  Pipeline Revenue
  Production Operating Costs
 44




---



##### Table of Contents



Pipeline Operating Expense
  Production Segment Depreciation, Depletion and
    Amortization
  Pipeline Depreciation and
    Amortization
  Production Segment Gain (loss) on Sale of
    Assets
  Impairment of Production Properties
  Impairment of Pipeline Assets
  General and Administrative Expenses Legal Proceedings Form 10-K
  Gain from Derivative Financial
    Instruments
 45




---



##### Table of Contents



Gain on Forgiveness of Debt Liquidity and Capital
    Resources  Credit Agreements
  Interest Expense, Net
  Recovery of Misappropriated Funds
  Year
    ended December 31, 2009 compared to the year ended
    December 31, 2008
    Year EndedDecember 31,


Increase/2009


2008


(Decrease)($ in thousands except per unit data)Production SegmentOil and gas sales

$
79,893


$
162,499


$
(82,606
)


(50.8
)%Gathering revenue

$
7,760


$
8,704


$
(944
)


(10.8
)%Production operating costs

$
55,961


$
66,218


$
(10,257
)


(15.5
)%Depreciation, depletion and amortization

$
39,438


$
60,369


$
(20,931
)


(34.7
)%Impairment

$
215,068


$
298,861


$
(83,793
)


(28.0
)%Production DataTotal production (Mmcfe)


21,733



21,748



(15
)


(0.1
)%Average daily production (Mmcfe/d)


59.5



59.4



0.1



0.2
%Average Sales Price per Unit (Mcfe)

$
3.68


$
7.47


$
(3.79
)


(50.7
)%Average Unit Costs per McfeProduction operating costs

$
2.58


$
3.04


$
(0.46
)


(15.1
)%Depreciation, depletion and amortization

$
1.81


$
2.78


$
(0.97
)


(34.9
)%Pipeline SegmentPipeline revenue

$
18,428


$
19,472


$
(1,044
)


(5.4
)%Pipeline operating expense

$
6,573


$
7,635


$
(1,062
)


(13.9
)%Depreciation and amortization expense

$
8,364


$
10,076


$
(1,712
)


(17.0
)%Impairment

$
53,562


$



$
53,562




*%     *
    
    Not meaningful  Oil and Gas Sales
  Gathering Revenue
 46




---



##### Table of Contents



Pipeline Revenue
  Production Operating Cost
  Pipeline Operating Expense
  Production Segment Depreciation, Depletion and
    Amortization
  Pipeline Segment Depreciation and
    Amortization
  Impairment of Production Properties
  Impairment of Pipeline Assets
  General and Administrative Expenses
 47




---



##### Table of Contents



Gain from Derivative Financial
    Instruments
  Interest Expense, Net
  Recovery of Misappropriated Funds
  Liquidity
    and Capital Resources
  Historical
    Cash Flows and Liquidity
  Cash Flows from Operating Activities
    Cash Flows from Investing Activities
 48




---



##### Table of Contents



Year Ended December 31,2010


2009


2008(In thousands)Capital expendituresLeasehold acquisition

$
2,192


$
1,998


$
18,945Exploration






128



1,273Development


27,396



6,244



84,328Acquisition of PetroEdge










142,618Acquisition of Seminole County, Oklahoma property










9,500Pipeline


1,362



678



1,391Other items (primarily capitalized overhead and interest)


1,370



511



9,061Total capital expenditures

$
32,320


$
9,559


$
267,116   Cash Flows from Financing Activities
  White
    Deer Investment
  1 2
 49




---



##### Table of Contents



Appalachian
    Basin Asset Sale
    Credit
    Agreements
    Former
    Credit Agreements
            Form 10-K Form 10-Q
  New
    Credit Agreements
       50




---



##### Table of Contents



Borrowing
    Base Facility
    Form 10-K
    Secured
    Pipeline Loan
    Form 10-K
    QER
    Loan
   51




---



##### Table of Contents



Form 10-K
        Form 10-K
  Sources
    of Liquidity in 2011 and Capital Requirements
     52




---



##### Table of Contents



Risk Factors  Risks Related to
    Our Business  Our identified drilling location
    inventories will be developed over several years, making them
    susceptible to uncertainties that could materially alter the
    occurrence or timing of their drilling, resulting in temporarily
    lower cash from operations, which may impact our results of
    operations.
    Contractual
    Obligations
    Payments Due by PeriodLess Than


1-3


4-5


More ThanTotal


1 Year


Years


Years


5 Years(In thousands)Borrowing Base Facility

$
187,000


$



$
187,000


$



$
Secured Pipeline Loan


13,500



10,500



3,000







QER Loan


19,721







19,721







Interest expense on bank credit facilities


21,422



8,785



12,637







Operating lease obligations


13,133



7,178



3,240



1,661



1,054Total commitments

$
254,776


$
26,463


$
225,598


$
1,661


$
1,054   Off-Balance
    Sheet Arrangements and Letters of Credit
    Critical
    Accounting Policies
   53




---



##### Table of Contents



Oil
    and Gas Reserves
    Oil
    and Natural Gas Properties
    units-of-production
    ASC 400-20 Retirement and Environmental Obligations-Asset Retirement
    Obligation
 54




---



##### Table of Contents



Unevaluated
    Properties
    Future
    Abandonment Costs
      Form 10-K).
  Derivative
    Instruments
  mark-to-market
 55




---



##### Table of Contents



Income
    Taxes
    Form 10-K
    Recent
    Accounting Pronouncements
  2010-06, Fair Value Measurements and Disclosures (Topic 820):
    Improving Disclosures about Fair Value Measurements
  2010-09, Subsequent Events (Topic 855): Amendments to Certain
    Recognition and Disclosure Requirements
 56




---



##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.    Commodity
    Price Risk
          2010


2009


2008Realized gain (loss)

$
31,932


$
98,148


$
(6,388
)Unrealized gain (loss)


41,184



(50,026
)


72,533Total gain from derivative financial instruments

$
73,116


$
48,122


$
66,145  57




---



##### Table of Contents



Year Ending December 31,2011


2012


2013


Total($ in thousands, except volumes and per unit data)Natural Gas SwapsContract volumes (Mmbtu)


13,550,302



11,000,004



9,000,003



33,550,309Weighted-average fixed price per Mmbtu

$
6.80


$
7.13


$
7.28


$
7.04Fair value, net

$
31,588


$
22,728


$
16,905


$
71,221Natural Gas Basis SwapsContract volumes (Mmbtu)


8,549,998



9,000,000



9,000,003



26,550,001Weighted-average fixed price per Mmbtu

$
(0.67
)

$
(0.70
)

$
(0.71
)

$
(0.69
)Fair value, net

$
(3,417
)

$
(3,405
)

$
(3,031
)

$
(9,853
)Crude Oil SwapsContract volumes (Bbl)


48,000



42,000







90,000Weighted-average fixed price per Bbl

$
85.90


$
87.90


$



$
86.83Fair value, net

$
(375
)

$
(245
)

$



$
(620
)Total fair value, net

$
27,796


$
19,078


$
13,874


$
60,748   Interest
    Rate Risk
    ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA.  page F-1.
 58




---



##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rules 13a-15(e) 15d-15(e)
  Form 10-K,
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
  Form 10-K,
 59




---



##### Table of Contents



Changes
    in Internal Control Over Financial Reporting
  Form 10-K
            and/or
                  Auditor
    Attestation Report
   60




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE
    GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  (a)(1) and (2) Financial Statements page F-1 Form 10-K.
  (a)(3) Index to Exhibits Regulation S-K Form 10-K
 61




---



##### Table of Contents



Index to
    Financial Statements
  PostRock Energy CorporationReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets


F-3Consolidated Statements of Operations


F-4Consolidated Statements of Cash Flows


F-5Consolidated Statements of Stockholders
    (Deficit) Equity


F-6Notes to Consolidated Financial Statements


F-7  F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM              F-2




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2010


2009($ in thousands, except share and per share data)(Predecessor)ASSETSCurrent assetsCash and cash equivalents

$
730


$
20,884Restricted cash


28



718Accounts receivable  trade, net


11,845



13,707Other receivables


1,153



2,269Inventory


6,161



9,702Other current assets


2,771



8,141Current derivative financial instrument assets


31,588



10,624Total current assets


54,276



66,045Oil and natural gas properties under full cost method of
    accounting, net


116,488



40,478Pipeline assets, net


61,148



136,017Other property and equipment, net


15,964



19,433Other assets, net


9,303



2,727Long-term derivative financial instrument assets


39,633



18,955Total assets

$
296,812


$
283,655LIABILITIES AND EQUITYCurrent liabilitiesAccounts payable

$
7,030


$
10,852Revenue payable


5,898



5,895Accrued expenses


8,210



11,417Current portion of notes payable


10,500



310,015Current derivative financial instrument liabilities


3,792



1,447Total current liabilities


35,430



339,626Long-term derivative financial instrument liabilities


6,681



8,569Notes payable


209,721



19,295Asset retirement obligations


7,150



6,552Total liabilities


258,982



374,042Commitments and contingenciesSeries A Cumulative Redeemable Preferred Stock,
    $0.01 par value; issued and outstanding 
    6,000 shares (liquidation value of $61,980)


50,622Stockholders equityPreferred stock of Predecessor, $0.001 par value;
    authorized shares  50,000,000; none issued and
    outstanding






Common stock of Predecessor, $0.001 par value; authorized
    shares  200,000,000; issued  32,160,121;
    outstanding  31,981,317






33Preferred stock, $0.01 par value; authorized
    shares  5,000,000; 195,842 Series B Voting
    Preferred Stock issued and outstanding


2Common stock, $0.01 par value; authorized
    shares  40,000,000; issued and
    outstanding  8,238,982


82Additional paid-in capital


377,538



299,010Treasury stock of Predecessor at cost






(7
)Accumulated deficit


(390,414
)


(447,413
)Total stockholders deficit


(12,792
)


(148,377
)Noncontrolling interests






57,990Total (deficit) equity


(12,792
)


(90,387
)Total liabilities and equity

$
296,812


$
283,655    F-3




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  (Predecessor)March 6, 2010


January 1, 2010


Years Endedto December 31,


to March 5,


December 31,2010


2010


2009


2008($ in thousands, except per share data)RevenueOil and gas sales

$
69,277


$
18,659


$
79,893


$
162,499Gathering revenue


4,771



1,076



7,760



8,704Pipeline revenue


8,380



1,749



18,428



19,472Total revenues


82,428



21,484



106,081



190,675Costs and expensesOil and gas production


38,329



8,645



55,961



66,218Pipeline operating


5,195



1,110



6,573



7,635General and administrative expenses


20,705



5,735



41,723



28,269Depreciation, depletion and amortization


18,683



4,164



47,802



70,445(Gain) loss on sale of assets


(13,495
)






25



(24
)Impairments










268,630



298,861Recovery of misappropriated funds


(1,592
)






(3,412
)


Total costs and expenses


67,825



19,654



417,302



471,404Operating income (loss)


14,603



1,830



(311,221
)


(280,729
)Other income (expense)Gain from derivative financial instruments


47,870



25,246



48,122



66,145Gain on forgiveness of debt


2,909











Other income (expense)


(24
)


(4
)


108



305Interest expense


(20,169
)


(5,340
)


(29,573
)


(25,609
)Interest income


32



4



244



236Total other income (expense)


30,618



19,906



18,901



41,077Income (loss) before income taxes and noncontrolling interests


45,221



21,736



(292,320
)


(239,652
)Income tax benefit (expense)














Net income (loss)


45,221



21,736



(292,320
)


(239,652
)Net (income) loss attributable to noncontrolling interests






(9,958
)


147,398



72,268Net income (loss) attributable to controlling interests


45,221



11,778



(144,922
)


(167,384
)Preferred stock dividends


(1,980
)










Accretion of redeemable preferred stock


(327
)










Net income (loss) available to common stockholders

$
42,914


$
11,778


$
(144,922
)

$
(167,384
)Net income (loss) per share attributable to common stockholdersBasic

$
5.29


$
0.37


$
(4.55
)

$
(6.20
)Diluted

$
4.62


$
0.36


$
(4.55
)

$
(6.20
)Weighted average common and common equivalent shares outstandingBasic


8,110



32,137



31,833



27,011Diluted


9,295



32,614



31,833



27,011    F-4




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  PredecessorMarch 6, 2010


January 1, 2010to December


to March


Years Ended December 31,31, 2010


5, 2010


2009


2008($ in thousands)Cash flows from operating activitiesNet income (loss)

$
45,221


$
21,736


$
(292,320
)

$
(239,652
)Adjustments to reconcile net income (loss) to cash provided by
    operationsDepreciation, depletion and amortization


18,683



4,164



47,802



70,445Impairments










268,630



298,861Stock-based compensation


1,635



808



1,279



2,425Amortization of deferred financing costs


5,753



2,094



7,761



2,100Change in fair value of derivative financial instruments


(19,611
)


(21,573
)


50,026



(72,533
)Recovery of misappropriated funds, net of liabilities assumed


(487
)






(977
)


Loss (Gain) on disposal of property and equipment


(13,495
)






25



(24
)Gain on troubled debt restructuring


(2,909
)










Other non-cash changes to items affecting net loss


138







1,000



Change in assets and liabilitiesAccounts receivable


2,400



(237
)


3,008



(1,158
)Other receivables


(199
)


1,014



7,165



(7,954
)Other current assets


(486
)


466



1,461



4,173Other assets


(3,224
)


2



193



318Accounts payable


(4,773
)


(83
)


(25,115
)


5,233Revenue payable


160



(157
)


(2,526
)


584Accrued expenses


735



983



7,142



(1,187
)Other


17







65



269Net cash flows from operating activities


29,558



9,217



74,619



61,900Cash flows from investing activitiesRestricted cash


691



(1
)


(159
)


677Acquisition of business  PetroEdge














(141,777
)Equipment, drilling, leasehold and pipeline


(25,858
)


(2,282
)


(8,426
)


(141,553
)Proceeds from sale of oil and gas properties


14,062







8,898



16,100Net cash flows from investing activities


(11,105
)


(2,283
)


313



(266,553
)Cash flows from financing activitiesProceeds from bank borrowings


2,100



900



4,300



214,195Repayments of bank borrowings


(102,023
)


(41
)


(67,413
)


(59,800
)Distributions to unit holders














(24,413
)Debt and equity financing costs


(6,477
)






(4,720
)


(3,018
)Repurchase of restricted stock














(7
)Proceeds from issuance of preferred stock


60,000











Proceeds from issuance of common stock














84,801Net cash flows from financing activities


(46,400
)


859



(67,833
)


211,758Net increase (decrease) in cash


(27,947
)


7,793



7,099



7,105Cash and cash equivalents beginning of period


28,677



20,884



13,785



6,680Cash and cash equivalents end of period

$
730


$
28,677


$
20,884


$
13,785    F-5




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS (DEFICIT) EQUITY
 FOR THE
    YEARS ENDED DECEMBER 31, 2010, 2009 and 2008
  TotalPreferred


Common


Common


Additional


Shares of








Stockholders


Non-


TotalPreferred


Stock


Shares


Stock


Paid-in


Treasury


Treasury


Accumulated


(Deficit)


Controlling


(Deficit)Shares


Par Value


Issued


Par Value


Capital


Stock


Stock


Deficit


Equity


Interests


Equity($ in thousands, except share amounts)PredecessorBalance, December 31, 2007





$




23,553,230


$
24


$
211,852






$



$
(135,107
)

$
76,769


$
297,385


$
374,154Proceeds from stock offering










8,800,000



9



84,692















84,701



486



85,187Stock-based compensation


















1,939















1,939







1,939Restricted stock grants, net of forfeitures










(138,587
)






























Exercise of stock options










10,000







100















100







100Repurchase of common stock






















21,955



(7
)






(7
)






(7
)Distributions to non-controlling interests






































(21,067
)


(21,067
)Net loss






























(167,384
)


(167,384
)


(72,268
)


(239,652
)Balance, December 31, 2008










32,224,643



33



298,583



21,955



(7
)


(302,491
)


(3,882
)


204,536



200,654Stock-based compensation


















427















427



852



1,279Restricted stock grants, net of forfeitures










(64,522
)






























Net loss






























(144,922
)


(144,922
)


(147,398
)


(292,320
)Balance, December 31, 2009










32,160,121



33



299,010



21,955



(7
)


(447,413
)


(148,377
)


57,990



(90,387
)Stock-based compensation


















210















210



598



808Restricted stock grants, net of forfeitures










(1,687
)






























Net income






























11,778



11,778



9,958



21,736Balance, March 5, 2010










32,158,434


$
33


$
299,220



21,955


$
(7
)

$
(435,635
)

$
(136,389
)

$
68,546


$
(67,843
)Balance, March 6, 2010










































Issuance to Predecessor shareholders upon recombination










1,847,458



18



299,228











(435,635
)


(136,389
)






(136,389
)Issuance to Predecessor noncontrolling interests upon
    recombination










6,191,516



62



68,484















68,546







68,546Stock-based compensation














2



1,633















1,635







1,635Restricted stock grants, net of forfeitures










200,008































Issuance of Series B preferred stock


195,842



2



























2







2Issuance of warrants


















11,685















11,685







11,685Cost of issuing preferred stock and warrants


















(1,185
)














(1,185
)






(1,185
)Preferred stock dividends


















(1,980
)














(1,980
)






(1,980
)Preferred stock accretion


















(327
)














(327
)






(327
)Net income






























45,221



45,221







45,221Balance, December 31, 2010


195,842


$
2



8,238,982


$
82


$
377,538










$
(390,414
)

$
(12,792
)

$



$
(12,792
)    F-6




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Business Organization
      Note 2 
    Summary of Significant Accounting Policies
  Principles of Consolidation
  Use of Estimates in the Preparation of Financial
    Statements
 F-7




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue Recognition
    Cash and Cash Equivalents
  Accounts Receivable
  Other Current Assets
  Inventory
  Oil and Natural Gas Properties
  units-of-production
 F-8




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Unevaluated Properties
  Capitalized General and Administrative
    Expenses
  Capitalized Interest Costs
  Other Property and Equipment
    Impairment 
 F-9




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other Assets
  Asset Retirement Obligations
    Derivative Instruments
    mark-to-market
 F-10




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Legal
  Environmental Costs  and/or
  Stock-Based Compensation
  Compensation  Stock Compensation
  Income Taxes Income Taxes
    Net Income (Loss) per Common Share
 F-11




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Concentrations of Market Risk
  Concentrations of Credit Risk
    Fair Value Fair Value Measurements
    and Disclosures
    
    Level 1 Quoted prices available in
    active markets for identical assets or liabilities as of the
    reporting date.
    Level 2 Pricing inputs other than quoted
    prices in active markets included in Level 1 which are
    either directly or indirectly observable as of the reporting
    date. Level 2 consists primarily of non-exchange traded
    commodity derivatives.
    Level 3 Pricing inputs include
    significant inputs that are generally less observable from
    objective sources.     F-12




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Recent
    Accounting Pronouncements
  2010-06, Fair Value Measurements and Disclosures (Topic 820):
    Improving Disclosures about Fair Value Measurements.
  2010-09, Subsequent Events (Topic 855): Amendments to Certain
    Recognition and Disclosure Requirements
  Note 3 
    Acquisitions and Divestitures
  Acquisitions
  PetroEdge 
    Current assets

$
3,069Oil and gas properties


142,618Gathering facilities


1,820Current liabilities


(3,537
)Asset retirement obligations


(2,193
)Purchase price

$
141,777  F-13




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Pro Forma
    Summary Data related to acquisitions (unaudited)
    2008Pro forma revenue

$
182,813Pro forma net loss

$
(246,175
)Pro forma net loss per share  basic

$
(7.79
)Pro forma net loss per share  diluted

$
(7.79
)       Divestitures
  Appalachia Basin Asset Sale
  Regulation S-X Rule 4-10 Financial Accounting and Reporting for Oil and Gas Producing
    Activities Pursuant to the Federal Securities Laws and the
    Energy Policy and Conservation Act of 1975
 F-14




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 4 
    Property
    Predecessor2010


2009Oil and gas properties under the full cost method of accountingProperties being amortized(1)

$
319,966


$
205,199Properties not being amortized


188



596Total oil and gas properties, at cost


320,154



205,795Less accumulated depletion, depreciation and amortization


(203,666
)


(165,317
)Oil and gas properties, net

$
116,488


$
40,478Pipeline assets, at cost(1)

$
75,480


$
170,737Less accumulated depreciation


(14,332
)


(34,720
)Pipeline assets, net

$
61,148


$
136,017Other property and equipment at cost

$
33,154


$
33,704Less accumulated depreciation


(17,190
)


(14,271
)Other property and equipment, net

$
15,964


$
19,433     (1)
    
    The increase in oil and gas properties and the decrease in
    pipeline assets from the prior year is primarily due to
    reclassifying the Companys operations and assets of its
    gathering system in the Cherokee Basin from its former natural
    gas pipelines segment to its production segment in the fourth
    quarter of 2010 as described below.  Reclassification of gathering system 
 F-15




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Pipelines


15 to 40 yearsBuildings


25 yearsMachinery and equipment


10 yearsSoftware and computer equipment


3 to 5 yearsFurniture and fixtures


10 yearsVehicles


7 years     Impairment of oil and gas properties 
    Impairment of pipeline related assets 
 F-16




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5 
    Other Assets
    Predecessor2010


2009Intangible assets

$
968


$
1,260Deferred financing costs


4,010



252Escrowed funds


4,200



Plugging and abandonment bond






1,000Other


125



215Total other assets

$
9,303


$
2,727   Intangible Assets 
  Predecessor2010


2009Gross carrying amount

$
9,934


$
9,934Accumulated amortization


(7,931
)


(7,635
)Impairment


(1,035
)


(1,035
)Net carrying amount

$
968


$
1,264       Deferred Financing Costs  ASC 470-50 Debt  Modifications and Extinguishments
 F-17




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Escrowed Funds 
  Note 6 
    Asset Retirement Obligations
    PredecessorMarch 6 to


January 1 toDecember 31, 2010


March 5, 2010


2009Asset retirement obligations at beginning of year

$
6,648


$
6,552


$
5,922Liabilities incurred


41







78Liabilities settled


(23
)


(1
)


(13
)Divestitures


(5
)






Accretion


489



97



565Asset retirement obligations at end of year

$
7,150


$
6,648


$
6,552   Note 7 
    Derivative Financial Instruments
    Over-the-counter
  Derivatives and Hedging
 F-18




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair
    Value of Derivative Financial Instruments
  December 31,PredecessorDerivative Financial Instruments

Balance Sheet location

2010


2009Commodity contracts

Current derivative financial instrument asset

$
31,588


$
10,624Commodity contracts

Long-term derivative financial instrument asset


39,633



18,955Commodity contracts

Current derivative financial instrument liability


(3,792
)


(1,447
)Commodity contracts

Long-term derivative financial instrument liability


(6,681
)


(8,569
)$
60,748


$
19,563     PredecessorMarch 6 to


January 1 toDecember 31, 2010


March 5, 2010


2009


2008Realized gain (loss)(1)

$
28,259


$
3,673


$
98,148


$
(6,388
)Unrealized gain (loss)


19,611



21,573



(50,026
)


72,533Total gain from derivative financial instruments

$
47,870


$
25,246


$
48,122


$
66,145     (1)
    
    In 2009, includes $26 million received in June 2009 from
    exiting or amending certain above market natural gas derivative
    contracts. F-19




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year Ending December 31,2011


2012


2013


Total($ in thousands, except volumes and per unit data)Natural Gas SwapsContract volumes (Mmbtu)


13,550,302



11,000,004



9,000,003



33,550,309Weighted-average fixed price per Mmbtu

$
6.80


$
7.13


$
7.28


$
7.04Fair value, net

$
31,588


$
22,728


$
16,905


$
71,221Natural Gas Basis SwapsContract volumes (Mmbtu):


8,549,998



9,000,000



9,000,003



26,550,001Weighted-average fixed price per Mmbtu

$
(0.67
)

$
(0.70
)

$
(0.71
)

$
(0.69
)Fair value, net

$
(3,417
)

$
(3,405
)

$
(3,031
)

$
(9,853
)Crude Oil SwapsContract volumes (Bbl)


48,000



42,000







90,000Weighted-average fixed price per Bbl

$
85.90


$
87.90


$



$
86.83Fair value, net

$
(375
)

$
(245
)

$



$
(620
)Total fair value, net

$
27,796


$
19,078


$
13,874


$
60,748     Year Ending December 31,2010


2011


2012


Thereafter


Total($ in thousands, except volumes and per unit data)Natural Gas SwapsContract volumes (Mmbtu)


16,129,060



13,550,302



11,000,004



9,000,003



49,679,369Weighted-average fixed price per Mmbtu

$
6.26


$
6.80


$
7.13


$
7.28


$
6.78Fair value, net

$
10,424


$
7,530


$
6,662


$
4,763


$
29,379Natural Gas Basis SwapsContract volumes (Mmbtu):


3,630,000



8,549,998



9,000,000



9,000,003



30,180,001Weighted-average fixed price per Mmbtu

$
(0.63
)

$
(0.67
)

$
(0.70
)

$
(0.71
)

$
(0.69
)Fair value, net

$
(1,402
)

$
(2,973
)

$
(2,879
)

$
(2,717
)

$
(9,971
)Crude Oil SwapsContract volumes (Bbl)


30,000















30,000Weighted-average fixed price per Bbl

$
87.50


$



$



$



$
87.50Fair value, net

$
155


$



$



$



$
155Total fair value, net

$
9,177


$
4,557


$
3,783


$
2,046


$
19,563  F-20




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 8 
    Financial Instruments
    2010-06, Fair Value Measurements and Disclosures (Topic 820):
    Improving Disclosures about Fair Value Measurements
  Assets and Liabilities Measured at Fair Value on a Recurring
    Basis 
  PostRock










Total Net FairAt December 31, 2010

Level 1


Level 2


Level 3


ValueShort term investments  other current assets

$



$
1,354


$



$
1,354Derivative financial instruments  assets

$



$
71,221


$



$
71,221Derivative financial instruments  liabilities

$



$
(620
)

$
(9,853
)

$
(10,473
)Total

$



$
71,955


$
(9,853
)

$
62,102   Predecessor










Total Net FairAt December 31, 2009

Level 1


Level 2


Level 3


ValueDerivative financial instruments  assets

$



$
18,033


$
11,546


$
29,579Derivative financial instruments  liabilities

$



$



$
(10,016
)

$
(10,016
)Total

$



$
18,033


$
1,530


$
19,563          F-21




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    PredecessorMarch 6, 2010,


January 1, 2010 toDecember 31, 2010


March 5, 2010


2009Balance at beginning of period

$
5,455


$
1,530


$
60,947Realized and unrealized gains included in earnings


12,586



7,254



29,202Purchases, sales, issuances, and settlements


(7,595
)


(3,329
)


(88,619
)Transfers into and out of Level 3(1)


(20,299
)






Balance at end of period

$
(9,853
)

$
5,455


$
1,530     (1)
    
    The availability of market based information starting in July
    2010 has allowed the Company to reclassify a portion of its swap
    contracts from Level 3 to Level 2.  Additional Fair Value Disclosures 
    Note 9 
    Income Taxes
      PredecessorMarch 6 to


January 1 toDecember 31,


March 5,2010


2010


2009


2008Income tax expense (benefit) at statutory rate

$
15,828


$
4,122


$
(50,723
)

$
(58,584
)State income tax expense (benefit), net of federal


(651
)


289



(3,131
)


(3,789
)Effect of the Recombination


(22,170
)










Other


(3,673
)


318



2,548



300IRC Section 382 limitation


71,377



3,628







Change in valuation allowance


(60,711
)


(8,357
)


51,306



62,073Total tax expense (benefit)

$



$



$



$
    F-22




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Predecessor2010


2009Current deferred income tax assetsUnrealized loss for commodity derivative recorded for book, not
    for tax

$
1,414


$
Accrued liabilities


1,416



Allowance for bad debts


96



Total current deferred income tax assets


2,926



Noncurrent deferred income tax assetsUnrealized loss for commodity derivative recorded for book, not
    for tax


2,490



Partnership basis differences






49,889Property and equipment


91,942



19,284Asset retirement obligations


1,966



Net operating loss carryforwards


12,126



89,523Other carryforwards


38



34Other


1,909



979Total noncurrent deferred income tax assets


110,471



159,709Total deferred income tax assets


113,397



159,709Current deferred income tax liabilitiesUnrealized gain for commodity derivative recorded for book, not
    for tax


(11,774
)


Total current deferred income tax liabilities


(11,774
)


Noncurrent deferred income tax liabilitiesUnrealized gain for commodity derivative recorded for book, not
    for tax


(14,773
)


Other


(1,084
)


Total noncurrent deferred income tax liabilities


(15,857
)


Total deferred income tax liabilities


(27,631
)


Net deferred income tax assets


85,766



159,709Valuation allowance


(85,766
)


(159,709
)Total deferred tax asset (liability)

$



$
      F-23




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    60-month
  60-month
    ASC 740-10 ASC 740-10,
 F-24




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 10 
    Long-Term Debt
    (Predecessor)December 31,


December 31,2010


2009New Credit AgreementsBorrowing Base Facility

$
187,000


$
Secured Pipeline Loan


13,500



QER Loan


19,721



Former Credit AgreementsQuest Cherokee Loan






145,000Second Lien Loan






29,821Midstream Loan






118,728PESC Loan






35,658Notes payable to banks and finance companies






103Total debt


220,221



329,310Less current maturities included in current liabilities


10,500



310,015Total long-term debt

$
209,721


$
19,295   Former
    Credit Agreements
            Form 10-K Form 10-Q
  New
    Credit Agreements
     F-25




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Borrowing
    Base Facility
          Covenants
  
    permitting the Companys current ratio (ratio of
    consolidated current assets (as defined in the agreement) to
    consolidated current liabilities (as defined in the agreement))
    at any fiscal quarter-end to be less than or equal to 1.0 to 1.0;
    permitting the Companys interest coverage ratio (ratio of
    adjusted consolidated EBITDA to consolidated interest charges)
    at any fiscal quarter-end to be less than or equal to 3.0 to 1.0
    measured on a trailing four quarter basis; and F-26




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    permitting the Companys leverage ratio (ratio of cash
    adjusted consolidated funded debt to adjusted consolidated
    EBITDA for the four fiscal quarters ending on the applicable
    fiscal quarter-end) (1) commencing with the quarter ending
    September 30, 2010, and ending on the quarter ending
    March 31, 2011, to be greater than or equal to 4.5 to 1.0,
    (2) commencing with the quarter ending June 30, 2011,
    and ending on the quarter ending March 31, 2012, to be
    greater than or equal to 4.0 to 1.0, and (3) commencing
    with the quarter ending June 30, 2012, and continuing until
    the maturity date to be greater than or equal to 3.5 to 1.0.    Interest Rate
  Maturity
    Date June 30, 2013.
  Capital Expenditures 12-month 15-month
  Borrowing Base Redetermination 12-month
  Payments
  Security Interest
 F-27




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Events of Default 30-day
  Secured
    Pipeline Loan
        Covenants
    Interest Rate
  Maturity Date
  Payments
  Events of Default 30-day
  QER
    Loan
   F-28




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Covenants
  Interest Rate
  Maturity Date
  Payments
  Security Interest
  Events of Default 30-day
     F-29




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Troubled debt restructuring  ASC 470-60  Troubled Debt Restructurings by Debtors ASC 470-60) ASC 470-60,
      Debt
    fees
  ASC 470-50 Debt  Modifications and Extinguishments
   F-30




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 11 
    Noncontrolling Interests
  January 1, 2010to March 5,2010(1)


2009QELPBeginning of period

$
15,350


$
58,666Net income (loss) attributable to non-controlling interest


10,365



(43,553
)Stock compensation expense related to QELP unit-based awards


167



237End of period

$
25,882


$
15,350QMLPBeginning of period

$
42,640


$
145,870Net income (loss) attributable to non-controlling interest


(407
)


(103,845
)Stock compensation expense related to QMLP unit-based awards


431



615End of period

$
42,664


$
42,640Total non-controlling interest at end of period

$
68,546


$
57,990     (1)
    
    As a result of the Recombination on March 6, 2010,
    noncontrolling interests in QELP and QMLP were dissolved.  QELP
    QMLP
    Note 12 
    Redeemable Preferred Stock and Warrants
     F-31




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       F-32




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Distinguishing Liabilities from Equity
  1 2
     F-33




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Number ofSeries A Preferred


Series A PreferredStock


SharesBalance on September 21, 2010

$




Issuance of Series A Preferred Stock


49,188



6,000Dividends paid in kind


1,107Accretion


327



Balance on December 31, 2010

$
50,622



6,000     Note 13 
    Stockholders Equity
      WeightedNumber of


AverageNon-Vested


Grant-DateRestricted Shares


Fair ValuePredecessorNon-vested restricted shares at December 31, 2007


1,081,875


$
8.69Granted(a)


405,362



7.50Vested


(470,912
)


8.28Forfeited


(533,949
)


8.75Non-vested restricted shares at December 31, 2008


482,376



8.01Granted(b)


1,108,696



0.38Vested


(274,609
)


4.77Forfeited


(175,266
)


7.93Non-vested restricted shares at December 31, 2009


1,141,197



1.39Granted(c)


52,174



0.65Vested


(156,346
)


7.72Forfeited


(514
)


6.40Non-vested restricted shares at March 5, 2010


1,036,511


$
0.39   F-34




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  WeightedNumber of


AverageNon-Vested


Grant-DateRestricted Share


Fair ValuePostRockNon-vested restricted shares at March 6, 2010





$
Converted upon Recombination(d)


595,923



4.67Granted(e)


114,836



5.86Vested


(191,544
)


4.40Forfeited


(143,857
)


5.56Non-vested restricted shares at December 31, 2010


375,358


$
4.83     (a)
    
    Includes 140,000 stock options converted to 70,000 restricted
    shares during the year.(b)
    
    Consists of restricted shares granted to employees of QRCP, QELP
    and QMLP in December 2009. For those employees with greater than
    18 months service, 20% of the shares vest immediately and
    20% each year for four years. For those employees with less than
    18 months service, 25% of the shares vest each year for
    four years.(c)
    
    Shares granted vest 25% each year for four years.(d)
    
    1,036,511 restricted shares of QRCP, 938,093 phantom units of
    QELP and 664,946 restricted units of QMLP that were unvested at
    Recombination converted to 595,923 PostRock restricted share
    awards upon effectiveness of the Recombination.(e)
    
    Consists of 60,800 restricted shares granted to non-employee
    directors that vested immediately; the remainder consists
    primarily of restricted shares to employees that vest 25% each
    year for four years.    Stock Options 
 F-35




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageStock


Exercise Price perOptions


SharePredecessorOptions outstanding at December 31, 2007


250,000


$
10.00Granted


300,000



0.63Exercised


(10,000
)


10.05Converted


(140,000
)


10.03Options outstanding at December 31, 2008


400,000



2.98Granted


300,000



0.62Exercised






Forfeited


(30,000
)


10.00Options outstanding at December 31, 2009


670,000



1.61Granted






Exercised






Forfeited






Options outstanding at March 5, 2010


670,000


$
1.61   Weighted AverageStock


Exercise Price perOptions


SharePostRockOptions outstanding at March 6, 2010





$
Converted upon Recombination (a)


38,525



27.94Granted


549,800



3.55Exercised






Forfeited


(21,275
)


30.96Options outstanding at December 31, 2010


567,050



4.17Options exercisable at December 31, 2010


127,250


$
4.34     (a)
    
    670,000 stock options to purchase QRCP common stock were
    converted to stock options to purchase PostRock common stock
    upon effectiveness of the Recombination.     F-36




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12-month
  Predecessor2010

2009

2008Expected option life  years

5-6

10

10Volatility

75.2 - 84.1%

101.2%

69.8%Risk-free interest rate

1.8 - 2.0%

4.93%

5.42%Dividend yield





Fair value per share

$2.24 - $2.43

$0.45

$0.41 - $0.61         Total Share BasedCompensationExpensePredecessorYear Ended December 31, 2008

$
2,425Year Ended December 31, 2009


1,279January 1, 2010, to March 5, 2010


808PostRockMarch 6, 2010, to December 31, 2010

$
1,635  F-37




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Earnings (Loss) per Share 
  (Predecessor)March 6, 2010 to


January 1, 2010 toDecember 31, 2010


March 5, 2010


2009


2008Net income (loss) attributable to common stockholders

$
42,914


$
11,778


$
(144,922
)

$
(167,384
)DenominatorCommon shares


8,110,348



32,016,327



31,833,222



27,010,690Weighted average number of unvested share-based awards
    participating(1)






121,121







Denominator for basic earnings per share


8,110,348



32,137,448



31,833,222



27,010,690Effect of potentially dilutive securitiesUnvested share-based awards non-participating


81,815



450,751







Warrants


1,102,798Stock options


123



26,154







Denominator for diluted earnings per share


9,295,084



32,614,353



31,833,222



27,010,690Basic earnings per share

$
5.29


$
0.37


$
(4.55
)

$
(6.20
)Diluted earnings per share

$
4.62


$
0.36


$
(4.55
)

$
(6.20
)Securities excluded from earnings per share calculationUnvested share-based awards participating(1)(2)










1,141,197



482,376Antidilutive stock options


567,050



570,000



670,000



400,000     (1)
    
    FASB ASC 260 Earnings Per Sharerequires
    participating securities to be included in the allocation of
    earnings when calculating basic earnings per share, or EPS,
    under the two-class method. During periods of losses, these
    securities are not included in the basic EPS share computation.
    For the period from March 6 to December 31, 2010, there
    were no unvested participating share-based awards.(2)
    
    Restricted stock awards were excluded for the years ended
    December 31, 2009 and 2008, because the Predecessor
    reported a net loss for those periods.  Note 14 
    Commitments and Contingencies
  Litigation
 F-38




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Federal
    Class Action Securities Litigation
  Michael
    Friedman, individually and on behalf of all others similarly
    situated v. Quest Energy Partners LP, Quest Energy GP LLC,
    Quest Resource Corporation, Jerry Cash, and David E. Grose, Case
    No. 08-cv-936-M,
    U.S. District Court for the Western District of Oklahoma, filed
    September 5, 2008
  James
    Jents, individually and on behalf of all others similarly
    situated v. Quest Resource Corporation, Jerry Cash, David
    E. Grose, and John Garrison, Case
    No. 08-cv-968-M,
    U.S. District Court for the Western District of Oklahoma, filed
    September 12, 2008
  J.
    Braxton Kyzer and Bapui Rao, individually and on behalf of all
    others similarly situated v. Quest Energy Partners LP,
    Quest Energy GP LLC, Quest Resource Corporation and David E.
    Grose , Case
    No. 08-cv-1066-M,
    U.S. District Court for the Western District of Oklahoma, filed
    October 6, 2008
  Paul
    Rosen, individually and on behalf of all others similarly
    situated v. Quest Energy Partners LP, Quest Energy GP LLC,
    Quest Resource Corporation, Jerry Cash, and David E. Grose, Case
    No. 08-cv-978-M, U.S. District Court for the Western District of
    Oklahoma, filed September 17, 2008
  Rule 10b-5 and/or
  Federal
    Individual Securities Litigation
  Bristol
    Capital Advisors v. Quest Resource Corporation, Inc., Jerry
    Cash, David E. Grose, and John Garrison, Case
    No. CIV-09-932,
    U.S. District Court for the Western District of Oklahoma, filed
    August 24, 2009
  and/or
 F-39




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    J.
    Steven Emerson, Emerson Partners, J. Steven Emerson Roth IRA, J.
    Steven Emerson IRA RO II, and Emerson Family Foundation v.
    Quest Resource Corporation, Inc., Quest Energy Partners L.P.,
    Jerry Cash, David E. Grose, and John Garrison, Case
    No. 5:09-cv-1226-M,
    U.S. District Court for the Western District of Oklahoma, filed
    November 3, 2009
  and/or and/or
  Federal
    Derivative Cases
  James
    Stephens, derivatively on behalf of nominal defendant Quest
    Resource Corporation v. William H. Damon III, Jerry Cash,
    David Lawler, David E. Grose, James B. Kite Jr., John C.
    Garrison and Jon H. Rateau, Case
    No. 08-cv-1025-M,
    U.S. District Court for the Western District of Oklahoma, filed
    September 25, 2008
  and/or
  William
    Dean Enders, derivatively on behalf of nominal defendant Quest
    Energy Partners, L.P. v. Jerry D. Cash, David E.
    Grose, David C. Lawler, Gary Pittman, Mark Stansberry, J. Philip
    McCormick, Douglas Brent Mueller, Mid Continent
    Pipe & Equipment, LLC, Reliable Pipe &
    Equipment, LLC, RHB Global, LLC, RHB, Inc., Rodger H.
    Brooks, Murrell, Hall, McIntosh & Co. PLLP, and Eide
    Bailly LLP, Case
    No. CIV-09-752-M,
    U.S. District Court for the Western District of Oklahoma, filed
    July 17, 2009
   F-40




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
  State
    Court Derivative Cases
  Tim
    Bodeker, derivatively on behalf of nominal defendant Quest
    Resource Corporation v. Jerry Cash, David E. Grose, Bob G.
    Alexander, David C. Lawler, James B. Kite, John C. Garrison, Jon
    H. Rateau and William H. Damon III, Case
    No. CJ-2008-9042,
    District Court of Oklahoma County, State of Oklahoma, filed
    October 8, 2008
  William
    H. Jacobson, derivatively on behalf of nominal defendant Quest
    Resource Corporation v. Jerry Cash, David E. Grose,
    David C. Lawler, James B. Kite, Jon H. Rateau, Bob G. Alexander,
    William H. Damon III, John C. Garrison, Murrell, Hall,
    McIntosh & Co., LLP, and Eide Bailly, LLP, Case
    No. CJ-2008-9657,
    District Court of Oklahoma County, State of Oklahoma, filed
    October 27, 2008
  Amy
    Wulfert, derivatively on behalf of nominal defendant Quest
    Resource Corporation, v. Jerry D. Cash, David C. Lawler,
    Jon C. Garrison, John H. Rateau, James B. Kite Jr., William H.
    Damon III, David E. Grose, N. Malone Mitchell III, and Bryan
    Simmons, Case
    No. CJ-2008-9042 
    consolidated December 30, 2008, District Court of Oklahoma
    County, State of Oklahoma (Original Case No. CJ-2008-9624, filed
    October 24, 2008)
  Jacobson Wulfert In re Quest Resource
    Corporation Shareholder Derivative Litigation No. CJ-2008-9042.
  Royalty
    Owner Class Action
  Hugo
    Spieker, et al. v. Quest Cherokee, LLC, Case
    No. 07-1225-MLB,
    U.S. District Court for the District of Kansas, filed
    August 6, 2007
     F-41




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Litigation
    Related to Oil and Gas Leases
  Billy
    Bob Willis, et al. v. Quest Resource Corporation, et al.,
    Case
    No. CJ-09-063,
    District Court of Nowata County, State of Oklahoma, filed
    April 28, 2009
  Larry
    Reitz, et al. v. Quest Resource Corporation, et al., Case
    No. CJ-09-076,
    District Court of Nowata County, State of Oklahoma, filed
    May 22, 2009
    Other
    Matters
  Environmental Matters
  Operating Lease Commitments
        Year ending December 31,2011

$
7,1782012


2,1112013


1,1292014


9322015


729Thereafter


1,054Total minimum lease obligations

$
13,133    F-42




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Financial Advisor Contracts
  Note 15 
    Supplemental Cash Flow Information
  PredecessorMarch 6 to


January 1 to


Year EndedDecember 31,


March 5,


December 31,2010


2010


2009


2008(In thousands)Cash paid for interest

$
10,699


$
2,686


$
19,293


$
21,813Cash paid for income taxes














Noncash investing activityEquity securities received on the sale of oil and gas properties


14,000











Noncash financing activityReduction of debt through conveyance of financial securities
    received from sale of oil and gas properties


12,646











Issuance of preferred stock and warrants in lieu of cash
    dividends


1,980











Accretion of discount on redeemable preferred stock


327











   Note 16 
    Related Party Transactions
    Note 17 
    Operating Segments
    Production
 F-43




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Pipeline
     F-44




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Production


Pipeline


TotalPostRockMarch 6 to December 31, 2010Total revenues

$
74,048


$
8,380


$
82,428Segment operating profit

$
33,456


$
260


$
33,716Capital expenditures

$
28,564


$
919


$
29,483Depreciation, depletion and amortization

$
15,835


$
2,848


$
18,683Impairment

$



$



$
PredecessorJanuary 1 to March 5, 2010Total revenues

$
19,735


$
1,749


$
21,484Segment operating profit

$
7,516


$
49


$
7,565Capital expenditures

$
2,270


$
567


$
2,837Depreciation, depletion and amortization

$
3,574


$
590


$
4,164Impairment

$



$



$
Year Ended December 31, 2009Total revenues

$
87,653


$
18,428


$
106,081Segment operating profit (loss)

$
(222,839
)

$
(50,071
)

$
(272,910
)Capital expenditures

$
8,762


$
797


$
9,559Depreciation, depletion and amortization

$
39,438


$
8,364


$
47,802Impairment

$
215,068


$
53,562


$
268,630Year Ended December 31, 2008Total revenues

$
171,203


$
19,472


$
190,675Segment operating profit (loss)

$
(254,221
)

$
1,761


$
(252,460
)Capital expenditures

$
265,725


$
1,391


$
267,116Depreciation, depletion and amortization

$
60,369


$
10,076


$
70,445Impairment

$
298,861


$



$
298,861Identifiable assetsDecember 31, 2010(1)

$
232,111


$
64,701


$
296,812December 31, 2009

$
128,548


$
155,107


$
283,655     (1)
    
    Reflects $77.2 million of the Companys gathering
    system assets reclassified to the full cost pool during the
    fourth quarter of 2010. F-45




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##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     PredecessorMarch 6 to


January 1 to


Years EndedDecember 31,


March 5,


December 31,2010


2010


2009


2008Segment operating profit (loss)

$
33,716


$
7,565


$
(272,910
)

$
(252,460
)General and administrative expenses


(20,705
)


(5,735
)


(41,723
)


(28,269
)Recovery of (loss on) misappropriation of funds


1,592







3,412



Gain from derivative financial instruments


47,870



25,246



48,122



66,145Interest expense, net


(20,137
)


(5,336
)


(29,329
)


(25,373
)Gain on forgiveness of debt


2,909











Other income (expense), net


(24
)


(4
)


108



305Loss before income taxes and noncontrolling interests

$
45,221


$
21,736


$
(292,320
)

$
(239,652
)   Note 18 
    Profit Sharing Plan
    Note 19 
    Subsequent Events
    Note 20 
    Supplemental Financial Information  Quarterly
    Financial Data  (Unaudited)
    Quarters Ended


March 6 to


January 1 toDecember 31,


September 30,


June 30,


March 31


March 5(Predecessor)2010Total revenues

$
23,451


$
25,323


$
23,826


$
9,828


$
21,484Operating income (loss)(1)


12,173



4,462



(2,676
)


644



1,830Net income (loss)


9,609



28,189



(9,587
)


17,010



21,736Net income (loss) per common shareBasic

$
0.91


$
3.47


$
(1.19
)

$
2.12


$
0.37Diluted

$
0.66


$
3.21


$
(1.19
)

$
2.04


$
0.36  F-46




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Quarters EndedDecember 31,


September 30,


June 30,


March 31,2009 (Predecessor)Total revenues

$
28,348


$
23,962


$
23,693


$
30,078Impairment(2)


165,728











102,902Operating income (loss)(1)(3)


(174,516
)


(18,416
)


(6,617
)


(111,672
)Net income (loss)(3)


(166,026
)


(16,724
)


(30,530
)


(79,040
)Net income (loss) per common shareBasic

$
(2.01
)

$
(0.36
)

$
(0.57
)

$
(1.62
)Diluted

$
(2.01
)

$
(0.36
)

$
(0.57
)

$
(1.62
)     (1)
    
    Total revenue less total costs and expenses.(2)
    
    The impairment charge of $102.9 million in the first
    quarter is related to the carrying value of oil and gas
    properties and the impairment charge of $165.7 million in
    the fourth quarter is related to the carrying value of the
    Companys gathering system and interstate pipeline assets.(3)
    
    Fourth quarter of 2009 was impacted by the change in prices used
    in determining the Companys proved oil and gas reserves.  Note 21 
    Supplemental Information on Oil and Gas Producing Activities
     (Unaudited)
  Extractive
    Activities  Oil and Gas ,
  Modernization
    of Oil and Gas Reporting
  Form 10-K
    
    Pricing mechanism for oil and gas reserves estimation The SECs previous rules required proved
    reserve estimates to be calculated using prices as of the end of
    the period and held constant over the life of the reserves.
    Price changes could be made only to the extent provided by
    contractual arrangements. The revised rules require reserve
    estimates to be calculated using a
    12-month
    average price. The
    12-month
    average price will also be used for purposes of calculating the
    full cost ceiling limitations. The use of a
    12-month
    average price rather than a
    single-day
    price is expected to reduce the impact on reserve estimates and
    the full cost ceiling limitations due to short-term volatility
    and seasonality of prices.
    Reasonable certainty The SECs previous
    definition of proved oil and gas reserves incorporated certain
    specific concepts such as lowest known hydrocarbons,
    which limited the ability to claim F-47




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  proved reserves in the absence of information on fluid contacts
    in a well penetration, notwithstanding the existence of other
    engineering and geoscientific evidence. The revised rules amend
    the definition to permit the use of new reliable technologies to
    establish the reasonable certainty of proved reserves. This
    revision also includes provisions for establishing levels of
    lowest known hydrocarbons and highest known oil through reliable
    technology other than well penetrations.      
    Unproved reserves The SECs previous
    rules prohibited disclosure of reserve estimates other than
    proved in documents filed with the SEC. The revised rules permit
    disclosure of probable and possible reserves and provide
    definitions of probable reserves and possible reserves.
    Disclosure of probable and possible reserves is optional.
    However, such disclosures must meet specific requirements.
    Disclosures of probable or possible reserves must provide the
    same level of geographic detail as proved reserves and must
    state whether the reserves are developed or undeveloped.
    Probable and possible reserve disclosures must also provide the
    relative uncertainty associated with these classifications of
    reserves estimations.  Net
    Capitalized Costs
    2010


2009Oil and gas properties and related leasehold costsProved

$
319,966


$
205,199Unproved


188



596320,154



205,795Accumulated depreciation, depletion and amortization


(203,666
)


(165,317
)Net capitalized costs

$
116,488


$
40,478    F-48




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Costs
    Incurred
    2010(a)


2009


2008Proved property acquisition costs

$
1,364


$
1,293


$
152,118
(b)Unproved property acquisition costs


828



705



18,945Exploration costs






128



1,273Development costs


27,396



5,087



58,070$
29,588


$
7,213


$
230,406     (a)
    
    Costs incurred for the period from January 1 to
    March 5, 2010, were $2.1 million.(b)
    
    Includes the acquisition of the PetroEdge & Seminole
    County, Oklahoma properties.  Oil and
    Gas Reserve Quantities
       F-49




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Gas  Mcf


Oil  BblsProved reservesBalance, December 31, 2007


210,923,406



36,556Purchase of reserves in place


94,727,687



1,560,946Extensions, discoveries, and other additions


13,897,600



Sale of reserves


(4,386,200
)


Revisions of previous estimates(1)


(123,204,433
)


(833,070
)Production


(21,328,687
)


(69,812
)Balance, December 31, 2008


170,629,373



694,620Purchase of reserves in place


142,985



34,905Extensions, discoveries, and other additions


62,067



Sale of reserves






Revisions of previous estimates


(79,724,789
)


177,528Production


(21,235,065
)


(83,015
)Balance, December 31, 2009


69,874,571



824,038Purchase of reserves in place


10,842



Extensions, discoveries, and other additions


574,200



11,851Sale of reserves


(13,016,672
)


Revisions of previous estimates(2)


92,244,096



(15,040
)Production


(19,225,006
)


(76,583
)Balance, December 31, 2010


130,462,031



744,266Proved developed reservesBalance, December 31, 2008


136,544,572



682,031Balance, December 31, 2009


62,135,258



785,345Balance, December 31, 2010(2)


116,951,438



733,774     (1)
    
    Lower prices and projected increases in expected gathering costs
    at December 31, 2008 as compared to December 31, 2007
    reduced the economic lives of the underlying oil and gas
    properties and thereby decreased the estimated future reserves.
    Additionally, estimated proved reserves acquired from PetroEdge
    in 2008 decreased approximately 35.5 Bcfe due to the
    decrease in natural gas prices between the date of the PetroEdge
    acquisition and December 31, 2008 and approximately
    43.2 Bcfe, as a result of further technical analysis of the
    estimated PetroEdge reserves.(2)
    
    Improved prices and lower costs in 2010 resulted in an increase
    in reserves. Costs were lower primarily due to the decrease in
    gathering costs discussed above.  Standardized
    Measure of Discounted Future Net Cash Flows
   F-50




---



##### Table of Contents



POSTROCK
    ENERGY CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2010


2009


2008Future cash inflows

$
617,947


$
311,831


$
898,214Future production costs


335,688



202,645



570,142Future development costs


26,941



17,398



60,318Future income tax expense


14,937







Future net cash flows


240,381



91,788



267,75410% annual discount for estimated timing of cash flows


81,120



41,229



103,660Standardized measure of discounted future net cash flows related
    to proved reserves

$
159,261


$
50,559


$
164,094   property-by-property
  2010


2009


2008Crude oil price per Bbl

$
79.43


$
61.18


$
44.60Natural gas price per Mmbtu

$
4.38


$
3.87


$
5.71     As of December 31,2010


2009


2008Present value, beginning of period

$
50,559


$
164,094


$
286,177Net changes in prices and production costs


23,107



(35,203
)


(122,702
)Net changes in future development costs


(17,927
)


20,727



(4,247
)Previously estimated development costs incurred


17,515



5,292



66,060Sales of oil and gas produced, net


(40,962
)


(46,442
)


(103,826
)Extensions and discoveries


895



50



15,986Purchases of reserves in-place


15



283



119,733Sales of reserves in-place


(18,041
)






(5,045
)Revisions of previous quantity estimates


127,723



(63,230
)


(147,464
)Net change in income taxes


(12,037
)






36,360Accretion of discount


6,660



17,576



31,804Timing differences and other(a)


21,754



(12,588
)


(8,742
)Present value, end of period

$
159,261


$
50,559


$
164,094     (a)
    
    The change in timing differences and other are related to
    revisions in our estimated time of production and development. F-51




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##### Table of Contents



SIGNATURES
  Form 10-K
    David
    C. Lawler
   Chief Executive Officer and President
  POWER OF
    ATTORNEY
  Form 10-K Form 10-K Form 10-K Form 10-K)
    Name

Capacity

Date/s/  David
    C. LawlerDavid
    C. Lawler

Chief Executive Officer and President and Director (Principal
    Executive Officer)

March 3, 2011/s/  Jack
    T. CollinsJack
    T. Collins

Chief Financial Officer
    (Principal Financial Officer)

March 3, 2011/s/  David
    J. KlvacDavid
    J. Klvac

Chief Accounting Officer
    (Principal Accounting Officer)

March 3, 2011/s/  Duke
    R. LigonDuke
    R. Ligon

Chairman of the Board

March 3, 2011/s/  Nathan
    M. AveryNathan
    M. Avery

Director

March 3, 2011/s/  William
    H. Damon IIIWilliam
    H. Damon III

Director

March 3, 2011/s/  Thomas
    J. EdelmanThomas
    J. Edelman

Director

March 3, 2011/s/  Gabriel
    HammondGabriel
    Hammond

Director

March 3, 2011




---



##### Table of Contents



Name

Capacity

Date/s/  J.
    Philip McCormickJ.
    Philip McCormick

Director

March 3, 2011/s/  Gary
    M. PittmanGary
    M. Pittman

Director

March 3, 2011/s/  Jon
    H. RateauJon
    H. Rateau

Director

March 3, 2011/s/  James
    E. Saxton Jr.James
    E. Saxton Jr.

Director

March 3, 2011/s/  Daniel
    SpearsDaniel
    Spears

Director

March 3, 2011/s/  Mark
    A. StansberryMark
    A. Stansberry

Director

March 3, 2011




---



##### Table of Contents



INDEX TO
    EXHIBITS
  Exhibit No.

Description2
.1*

Agreement and Plan of Merger, dated as of July 2, 2009, by and
    among PostRock Energy Corporation (PostRock), Quest
    Resource Corporation (QRCP), Quest Midstream
    Partners, L.P., Quest Energy Partners, L.P., Quest Midstream GP,
    LLC, Quest Energy GP, LLC, Quest Resource Acquisition Corp.,
    Quest Energy Acquisition, LLC, Quest Midstream Holdings Corp.
    and Quest Midstream Acquisition, LLC (incorporated herein by
    reference to Exhibit 2.1 to QRCPs Current Report on Form
    8-K filed on July 7, 2009).2
.2*

First Amendment, dated as of October 2, 2009, to the Agreement
    and Plan of Merger, dated as of July 2, 2009 by and among
    PostRock, QRCP, Quest Midstream Partners, L.P., Quest Energy
    Partners, L.P., Quest Midstream GP, LLC, Quest Energy GP, LLC,
    Quest Resource Acquisition Corp., Quest Energy Acquisition, LLC,
    Quest Midstream Holdings Corp. and Quest Midstream Acquisition,
    LLC (incorporated herein by reference to Exhibit 2.1 to
    QRCPs Current Report on Form 8-K filed on October 8, 2009).2
.3*

Purchase and Sale Agreement, dated as of December 24, 2010, by
    and among Quest Eastern Resource LLC, PostRock MidContinent
    Production, LLC, Magnum Hunter Resources Corporation and Triad
    Hunter, LLC (portions of this exhibit have been omitted and
    filed separately with the Securities and Exchange Commission
    pursuant to a confidential treatment request under Rule 24b-2 of
    the Securities Exchange Act of 1934, as amended) (incorporated
    herein by reference to Exhibit 2.1 to PostRocks Current
    Report on Form 8-K filed on January 21, 2011).3
.1*

Restated Certificate of Incorporation of PostRock (incorporated
    herein by reference to Exhibit 3.1 to PostRocks Current
    Report on Form 8-K filed on March 10, 2010).3
.2*

Bylaws of PostRock (incorporated herein by reference to Exhibit
    3.2 to PostRocks Current Report on Form 8-K filed on March
    10, 2010).4
.1*

Specimen of certificate for shares of Common Stock of PostRock
    (incorporated herein by reference to Exhibit 4.1 to Amendment
    No. 1 to PostRocks Registration Statement on Form S-4
    filed on December 17, 2009, Registration No. 333-162366 (the
    Form S-4).4
.2*

Certificate of Designations for the Series A Cumulative
    Redeemable Preferred Stock (incorporated herein by reference to
    Exhibit 4.1 to PostRocks Current Report on Form 8-K filed
    on September 23, 2010).4
.3*

Certificate of Designations for the Series B Voting Preferred
    Stock (incorporated herein by reference to Exhibit 4.2 to
    PostRocks Current Report on Form 8-K filed on September
    23, 2010).4
.4*

Form of Warrant (incorporated herein by reference to Exhibit 4.3
    to PostRocks Current Report on Form 8-K filed on September
    3, 2010).10
.1*

Securities Purchase Agreement dated September 2, 2010 among
    PostRock, White Deer Energy L.P., White Deer Energy TE L.P., and
    White Deer Energy FI L.P. (incorporated herein by reference to
    Exhibit 10.1 to PostRocks Current Report on Form 8-K filed
    on September 3, 2010).10
.2*

Registration Rights Agreement dated September 21, 2010, among
    PostRock and White Deer Energy L.P., White Deer Energy TE L.P.
    and White Deer Energy FI L.P. (incorporated herein by reference
    to Exhibit 10.1 to PostRocks Current Report on Form 8-K
    filed on September 23, 2010).10
.3*

Master Debt Restructuring Agreement dated September 2, 2010
    among PostRock, PostRock Energy Services Corporation, PostRock
    Midcontinent Production, LLC, PostRock Midstream, LLC, Bluestem
    Pipeline, LLC, Quest Cherokee, LLC, the lenders party to the
    First Lien Credit Agreement signatory thereto, Royal Bank of
    Canada, as administrative agent and collateral agent for the
    First Lien Lenders, the lenders party to the Second Lien Credit
    Agreement signatory thereto, and Royal Bank of Canada, as
    administrative agent and collateral agent for the Second Lien
    Lenders, the lenders party to the Bluestem Credit Agreement
    signatory thereto, Royal Bank of Canada, as administrative agent
    and collateral agent for the Bluestem Lenders, the lender party
    to the Holdco Credit Agreement signatory thereto, and Royal Bank
    of Canada, as administrative agent and collateral agent for the
    Holdco Lender (incorporated herein by reference to Exhibit 10.3
    to PostRocks Current Report on Form 8-K filed on September
    3, 2010).10
.4*

Loan Transfer Agreement among PostRock Energy Services
    Corporation, PostRock MidContinent Production, LLC, PostRock KPC
    Pipeline, LLC and Royal Bank of Canada, as Administrative Agent
    and Collateral Agent, dated September 21, 2010 (incorporated
    herein by reference to Exhibit 10.9 to PostRocks Current
    Report on Form 8-K filed on September 23, 2010).




---



##### Table of Contents



Exhibit No.

Description10
.5*

Loan Transfer Agreement among PostRock Energy Services
    Corporation, PostRock MidContinent Production, LLC and Royal
    Bank of Canada, as Administrative Agent, dated as of September
    21, 2010 (incorporated herein by reference to Exhibit 10.10 to
    PostRocks Current Report on Form 8-K filed on September
    23, 2010).10
.6*

Second Amended and Restated Credit Agreement, dated September
    21, 2010, among PostRock Energy Services Corporation and
    PostRock MidContinent Production, LLC, as Borrowers, Royal Bank
    of Canada, as Administrative Agent and Collateral Agent and the
    lenders party thereto (incorporated herein by reference to
    Exhibit 10.3 to PostRocks Current Report on Form 8-K filed
    on September 23, 2010).10
.7*

Amended and Restated Intercreditor and Collateral Agency
    Agreement, dated September 21, 2010, among Royal Bank of Canada,
    BP Corporation North America Inc., and PostRock Energy Services
    Corporation and PostRock MidContinent Production, LLC, as
    Borrowers (incorporated herein by reference to Exhibit 10.4 to
    PostRocks Current Report on Form 8-K filed on September
    23, 2010).10
.8*

Amended and Restated Pledge and Security Agreement among
    PostRock Energy Services Corporation, PostRock MidContinent
    Production, LLC, STP Newco, Inc. and Quest Transmission Company,
    LLC and the Collateral Agent dated September 21, 2010
    (incorporated herein by reference to Exhibit 10.5 to
    PostRocks Current Report on Form 8-K filed on September
    23, 2010).10
.9*

Amended and Restated Guaranty, dated September 21, 2010,
    executed by PostRock in favor of Royal Bank of Canada, as
    Administrative Agent (incorporated herein by reference to
    Exhibit 10.6 to PostRocks Current Report on Form 8-K filed
    on September 23, 2010).10
.10*

Guaranty (Subsidiary) executed by STP Newco, Inc. and Quest
    Transmission Company, LLC, dated September 21, 2010
    (incorporated herein by reference to Exhibit 10.7 to
    PostRocks Current Report on Form 8-K filed on September
    23, 2010).10
.11*

Release and Termination of Guaranties by Royal Bank of Canada,
    as Administrative Agent and Collateral Agent, effective as of
    September 21, 2010, in favor of each of PostRock Energy Services
    Corporation, STP Newco, Inc. and PostRock MidContinent
    Production, LLC (incorporated herein by reference to Exhibit
    10.17 to PostRocks Current Report on Form 8-K filed on
    September 23, 2010).10
.12*

Second Amended and Restated Credit Agreement, dated September
    21, 2010, among PostRock Energy Services Corporation and
    PostRock KPC Pipeline, LLC, as Borrowers, the Royal Bank of
    Canada, as Administrative Agent and Collateral Agent and the
    lenders party thereto (incorporated herein by reference to
    Exhibit 10.8 to PostRocks Current Report on Form 8-K filed
    on September 23, 2010).10
.13*

Intercreditor and Collateral Agency Agreement between Royal Bank
    of Canada and PostRock KPC Pipeline, LLC, as obligor, dated
    September 21, 2010 (incorporated herein by reference to Exhibit
    10.11 to PostRocks Current Report on Form 8-K filed on
    September 23, 2010).10
.14*

Amended and Restated Pledge and Security Agreement, dated as of
    September 21, 2010, by and between PostRock KPC Pipeline, LLC
    and the Collateral Agent (incorporated herein by reference to
    Exhibit 10.12 to PostRocks Current Report on Form 8-K
    filed on September 23, 2010).10
.15*

Pledge and Security Agreement, dated as of September 21, 2010,
    by and between PostRock Energy Services Corporation and the
    Collateral Agent (incorporated herein by reference to Exhibit
    10.13 to PostRocks Current Report on Form 8-K filed on
    September 23, 2010).10
.16*

Amended and Restated Guaranty, dated as of September 21, 2010,
    executed by PostRock in favor of Royal Bank of Canada, as
    Administrative Agent (incorporated herein by reference to
    Exhibit 10.14 to PostRocks Current Report on Form 8-K
    filed on September 23, 2010).10
.17*

Release and Termination of Guaranties by Royal Bank of Canada,
    as Administrative Agent and Collateral Agent, effective as of
    September 21, 2010, in favor of each of PostRock Energy Services
    Corporation, Quest Transmission Company, LLC and PostRock KPC
    Pipeline, LLC (incorporated herein by reference to Exhibit 10.18
    to PostRocks Current Report on Form 8-K filed on September
    23, 2010).10
.18*

Assumption Agreement, dated as of September 21, 2010, by and
    between PostRock Energy Services Corporation and Quest Eastern
    Resource LLC (incorporated herein by reference to Exhibit 10.15
    to PostRocks Current Report on Form 8-K filed on September
    23, 2010).




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##### Table of Contents



Exhibit No.

Description10
.19*

Third Amended and Restated Credit Agreement dated September 21,
    2010, among Quest Eastern Resource LLC, as the Borrower, the
    lender party thereto and Royal Bank of Canada, as Administrative
    Agent and Collateral Agent (incorporated herein by reference to
    Exhibit 10.19 to PostRocks Current Report on Form 8-K
    filed on September 23, 2010).10
.20

First Amendment to Third Amended and Restated Credit Agreement,
    dated as of February 21, 2011, among Quest Eastern Resources
    LLC, as the Borrower, the lender party thereto and Royal Bank of
    Canada, as Administrative Agent and Collateral Agent.10
.21

Consent and Reaffirmation of PostRock Energy Services
    Corporation and PostRock, dated February 21, 2011.10
.22*

Pledge and Security Agreement executed by Quest Eastern Resource
    LLC, dated September 21, 2010 (incorporated herein by reference
    to Exhibit 10.20 to PostRocks Current Report on Form 8-K
    filed on September 23, 2010).10
.23*

Pledge and Security Agreement executed by PostRock Energy
    Services Corporation, dated September 21, 2010 (incorporated
    herein by reference to Exhibit 10.21 to PostRocks Current
    Report on Form 8-K filed on September 23, 2010).10
.24*

Release and Termination of Guaranties, Pledge and Security
    Agreements and Account Control Agreements by Royal Bank of
    Canada, as Administrative Agent and Collateral Agent, effective
    as of September 21, 2010, in favor of each of Quest Eastern
    Resource LLC, PostRock Energy Services Corporation and PostRock
    MidContinent Production, LLC (incorporated herein by reference
    to Exhibit 10.16 to PostRocks Current Report on Form 8-K
    filed on September 23, 2010).10
.25*

Asset Sale Agreement, dated as of September 21, 2010, by and
    between PostRock and Royal Bank of Canada (portions of this
    exhibit have been omitted and filed separately with the
    Securities and Exchange Commission pursuant to a confidential
    treatment request under Rule 24b-2 of the Securities Exchange
    Act of 1934, as amended) (incorporated herein by reference to
    Exhibit 10.9 to Amendment No. 1 to PostRocks Quarterly
    Report on Form 10-Q/A for the period ended September 30, 2010,
    filed on January 24, 2011).10
.26*

Registration Rights Agreement dated March 5, 2010, between
    PostRock, Alerian Opportunity Partners IV, LP, Alerian
    Opportunity Partners IX, L.P., Alerian Focus Partners, LP,
    Alerian Capital Partners, LP, Swank MLP Convergence Fund, LP,
    Swank Investment Partners, LP, The Cushing MLP Opportunity
    Fund I, LP, The Cushing GP Strategies Fund, LP, Bel Air MLP
    Energy Infrastructure Fund, LP, Tortoise Capital Resources
    Corporation and Tortoise North American Energy Corporation
    (incorporated herein by reference to Exhibit 10.1 to
    PostRocks Current Report on Form 8-K filed on March 10,
    2010).10
.27*

Form of QRCPs Indemnification Agreement for Directors
    (incorporated herein by reference to Exhibit 10.10 to
    QRCPs Annual Report on Form 10-K filed on June 3, 2009).10
.28*

Form of QRCPs Indemnification Agreement for Officers
    (incorporated herein by reference to Exhibit 10.11 to
    QRCPs Annual Report on Form 10-K filed on June 3, 2009).10
.29*

Employment Agreement dated April 10, 2007 between QRCP and David
    Lawler (incorporated herein by reference to Exhibit 10.1 to
    QRCPs Current Report on Form 8-K filed on April 13, 2007).10
.30*

First Amendment to Employment Agreement, dated October 20, 2008,
    between QRCP and David Lawler (incorporated herein by reference
    to Exhibit 10.2 to QRCPs Current Report on Form 8-K filed
    on October 24, 2008).10
.31*

Nonqualified Stock Option Agreement, dated October 20, 2008,
    between QRCP and David Lawler (incorporated herein by reference
    to Exhibit 10.4 to QRCPs Current Report on Form 8-K filed
    on October 24, 2008).10
.32*

Assignment and Amendment Agreement dated March 5, 2010, between
    PostRock, QRCP and David C. Lawler (incorporated herein by
    reference to Exhibit 10.11 to PostRocks Current Report on
    Form 8-K filed on March 10, 2010).10
.33*

Employment Agreement dated December 3, 2007 between QRCP and
    Jack T. Collins (incorporated herein by reference to Exhibit
    10.28 to QRCPs Annual Report on Form 10-K filed on March
    10, 2008).10
.34*

First Amendment to Employment Agreement, dated October 23, 2008,
    between QRCP and Jack Collins (incorporated herein by reference
    to Exhibit 10.3 to QRCPs Current Report on Form 8-K filed
    on October 24, 2008).




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##### Table of Contents



Exhibit No.

Description10
.35*

Second Amendment to Employment Agreement, dated August 28, 2009,
    between QRCP and Jack Collins (incorporated herein by reference
    to Exhibit 10.5 to QRCPs Quarterly Report on Form 10-Q
    filed on November 5, 2009).10
.36*

Assignment and Amendment Agreement dated March 5, 2010, between
    PostRock, QRCP and Jack Collins (incorporated herein by
    reference to Exhibit 10.13 to PostRocks Current Report on
    Form 8-K filed on March 10, 2010).10
.37*

Nonqualified Stock Option Agreement, dated October 23, 2008,
    between QRCP and Jack Collins (incorporated herein by reference
    to Exhibit 10.5 to QRCPs Current Report on Form 8-K filed
    on October 24, 2008).10
.38*

Employment Agreement dated March 21, 2007 between QRCP and
    Richard Marlin (incorporated herein by reference to Exhibit
    10.30 to QRCPs Annual Report on Form 10-K filed on March
    10, 2008).10
.39*

First Amendment to Employment Agreement, dated December 29,
    2008, between QRCP and Richard Marlin (incorporated herein by
    reference to Exhibit 10.32 to QRCPs Annual Report on Form
    10-K filed on June 3, 2009).10
.40*

Assignment and Amendment Agreement dated March 5, 2010, between
    PostRock, QRCP and Richard Marlin (incorporated herein by
    reference to Exhibit 10.14 to PostRocks Current Report on
    Form 8-K filed on March 10, 2010).10
.41*

Office Lease dated May 31, 2007 between QRCP and Oklahoma Tower
    Realty Investors, L.L.C. (incorporated herein by reference to
    Exhibit 10.5 to QRCPs Quarterly Report on Form 10-Q filed
    on August 9, 2007).10
.42*

Assignment and Assumptions of Leases, dated as of February 28,
    2008, by and between Chesapeake Energy Corporation and QRCP
    (incorporated herein by reference to Exhibit 10.7 to QRCPs
    Quarterly Report on Form 10-Q filed on May 12, 2008).10
.43*

First Amendment to Office Lease, dated as of February 7, 2008,
    by and between Cullen Allen Holdings L.P. and Quest Midstream
    Partners, L.P. (incorporated herein by reference to Exhibit 10.6
    to QRCPs Quarterly Report on Form 10-Q filed on May 12,
    2008).10
.44*

Form of Indemnification Agreement for Officers and Directors
    (incorporated herein by reference to Exhibit 10.2 to
    PostRocks Current Report on Form 8-K filed on September
    23, 2010).10
.45*

PostRock 2010 Long-Term Incentive Plan (incorporated herein by
    reference to Annex B to the joint proxy statement/prospectus
    that is a part of PostRocks Registration Statement on Form
    S-4/A filed on February 2, 2010).10
.46*

Nonqualified Stock Option Agreement, dated August 15, 2007,
    between QRCP and William Damon III (incorporated herein by
    reference to Exhibit 10.75 to PostRocks Registration
    Statement on Form S-4/A filed on December 17, 2009).10
.47*

Restricted Shares Award Agreement dated April 26, 2010, between
    PostRock and David C. Lawler (incorporated herein by reference
    to Exhibit 10.16 to PostRocks Quarterly Report on From
    10-Q filed on May 13, 2010).10
.48*

PostRock Management Incentive Program (incorporated herein by
    reference to Exhibit 10.1 to PostRocks Current Report on
    Form 8-K filed on April 6, 2010).10
.49*

PostRock 2010 Long-Term Incentive Plan Form of Bonus Share Award
    Agreement (incorporated herein by reference to Exhibit 10.1 to
    PostRocks Current Report on Form 8-K filed on August 10,
    2010).10
.50*

PostRock 2010 Long-Term Incentive Plan Form of Stock Option
    Award Agreement (immediate vesting).10
.51*

PostRock 2010 Long-Term Incentive Plan Form of Stock Option
    Award Agreement (one-year vesting).10
.52*

PostRock 2010 Long-Term Incentive Plan Form of Stock Option
    Award Agreement (multi-year vesting) (incorporated herein by
    reference to Exhibit 10.2 to PostRocks Current Report on
    Form 8-K filed on August 10, 2010).10
.53*

PostRock 2010 Long-Term Incentive Plan Form of Restricted Share
    Award Agreement (multi-year vesting) (incorporated herein by
    reference to Exhibit 10.3 to PostRocks Current Report on
    Form 8-K filed on August 10, 2010).




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##### Table of Contents



Exhibit No.

Description10
.54*

PostRock 2010 Long-Term Incentive Plan Form of Restricted Share
    Unit Award Agreement (multi-year vesting) (incorporated herein
    by reference to Exhibit 10.4 to PostRocks Current Report
    on Form 8-K filed on August 10, 2010).10
.55*

Summary of certain director compensation matters (incorporated
    by reference to Exhibit 10.11 to PostRocks Quarterly
    Report on Form 10-Q filed November 10, 2010).21
.1

List of Subsidiaries.23
.1

Consent of Cawley, Gillespie & Associates, Inc.23
.2

Consent of UHY, LLP.31
.1

Certification by principal executive officer pursuant to Rule
    13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934,
    as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
    2002.31
.2

Certification by principal financial officer pursuant to Rule
    13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934,
    as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
    2002.32
.1

Certification by principal executive officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.32
.2

Certification by principal financial officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.99
.1

Report of Cawley, Gillespie & Associates, Inc.     *
    
    Incorporated by reference.
    
    Management contracts and compensatory plans and arrangements
    required to be filed as Exhibits pursuant to Item 14(a) of
    this report.  Form 10-K.