Document:

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                                                                    EXHIBIT 10.6

                                 REVOLVING NOTE

$25,000,000.00                                                     May 11, 2001

         FOR VALUE RECEIVED, the undersigned PETROQUEST ENERGY, L.L.C., a
Louisiana limited liability company (hereinafter referred to as the "Borrower")
hereby unconditionally promises to pay to the order of ROYAL BANK OF CANADA (the
"Lender") at the offices of HIBERNIA NATIONAL BANK, as Administrative Agent for
the Lenders (the "Agent") at 313 Carondelet Street, New Orleans, Louisiana
70130, the principal sum of Twenty-Five Million and No/100 DOLLARS
($25,000,000.00), in lawful money of the United States of America together with
interest from the date funds are made available to the Borrower hereunder until
paid at the rates specified in the Credit Agreement (as hereinafter defined).
All payments of principal and interest due hereunder are payable at the offices
of Agent, or at such other address as Lender shall designate in writing to
Borrower.

         The principal and all accrued interest on this Note shall be due and
payable in accordance with the terms and provisions of the Credit Agreement.

         This Note is executed pursuant to that certain Amended and Restated
Credit Agreement dated May 11, 2001, among Borrower, PetroQuest Energy, Inc.,
Agent, and Lenders (the "Credit Agreement"), and is one of the Notes referred to
therein. Reference is made to the Credit Agreement and the Loan Documents (as
that term is defined in the Credit Agreement) for a statement of prepayment,
rights and obligations of Borrower, for a statement of the terms and conditions
under which the due date of this Note may be accelerated and for statements
regarding other matters affecting this Note (including without limitation the
obligations of the holder hereof to advance funds hereunder, principal and
interest payment due dates, voluntary and mandatory prepayments, exercise of
rights and remedies, payment of attorneys' fees, court costs and other costs of
collection and certain waivers by Borrower and others now or hereafter obligated
for payment of any sums due hereunder). Upon the occurrence of an Event of
Default, as that term is defined in the Credit Agreement and Loan Documents, the
holder hereof (i) may declare forthwith to be entirely and immediately due and
payable the principal balance hereof and the interest accrued hereon, and (ii)
shall have all rights and remedies of the Lender under the Credit Agreement and
Loan Documents. This Note may be prepaid in accordance with the terms and
provisions of the Credit Agreement. Reference is made to the Credit Agreement
for provisions concerning the applicable procedures for Advances under this
Note. NOTWITHSTANDING ANYTHING HEREIN CONTAINED TO THE CONTRARY, THE MAXIMUM
AGGREGATE AMOUNT OF ALL ADVANCES AT ANY TIME OUTSTANDING UNDER THIS NOTE IS
LIMITED TO THE LENDER'S REVOLVING COMMITMENT PERCENTAGE OF THE BORROWING BASE
AMOUNT THEN IN EFFECT. Unless otherwise defined herein, each capitalized term
used herein shall have the same meaning set forth in the Credit Agreement.

         If Lender declares this Note to be in default, Lender has the right
prospectively to adjust and fix the simple interest rate under this Note until
this Note is paid in full, as follows: the fixed

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default interest rate shall be equal to twenty-one (21%) percent per annum, or
three (3%) percent per annum in excess of the interest rate under this Note at
the time of default, whichever is greater. Notwithstanding the foregoing, the
holder hereof shall never be entitled to receive, collect or apply, as interest
on this Note, any amount in excess of the Maximum Rate (as such term is defined
in the Credit Agreement), and, if the holder hereof ever receives, collects, or
applies as interest, any such amount which would be excessive interest, it shall
be deemed a partial prepayment of principal and treated hereunder as such; and
if the indebtedness evidenced hereby is paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the Maximum Rate, Borrower
and the holder hereof shall, to the maximum extent permitted under applicable
law (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the effects
thereof, and (iii) spread the total amount of interest throughout the entire
contemplated term of the obligations evidenced by this Note and/or referred to
in the Credit Agreement so that the interest rate is uniform throughout the
entire term of this Note; provided that, if this Note is paid and performed in
full prior to the end of the full contemplated term thereof; and if the interest
received for the actual period of existence thereof exceeds the Maximum Rate,
the holder hereof shall refund to Borrower the amount of such excess or credit
the amount of such excess against the indebtedness evidenced hereby, and, in
such event, the holder hereof shall not be subject to any penalties provided by
any laws for contracting for, charging, taking, reserving, or receiving interest
in excess of the Maximum Rate.

         If any payment of principal or interest on this Note shall become due
on a day other than a Business Day (as such term is defined in the Credit
Agreement), such payment shall be made on the next succeeding Business Day and
such extension of time shall in such case be included in computing interest in
connection with such payment.

         If this Note is placed in the hands of an attorney for collection, or
if it is collected through any legal proceeding at law or in equity or in
bankruptcy, receivership, or other court proceedings, Borrower agree to pay all
reasonable costs of collection, including, but not limited to, court costs and
reasonable attorneys' fees.

         Borrower and each surety, endorser, guarantor and other party ever
liable for payment of any sums of money payable on this Note, jointly and
severally waive presentment and demand for payment, notice of intention to
accelerate the maturity, protest, notice of protest and nonpayment, as to this
Note and as to each and all installments hereof, and agree that their liability
under this Note shall be joint, several and solidary, and shall not be affected
by any renewal or extension in the time of payment hereof, or in any
indulgences, or by any release or change in any security for the payment of this
Note, and hereby consent to any and all renewals, extensions, indulgences,
releases or changes.

         Borrower represents and warrants to Lender that loans evidenced by this
Note were entered into primarily for commercial or business purposes as provided
in La R.S. 9:3509.

         As security for the prompt and punctual payment of this Note, Borrower
collaterally assigns and pledges to Lender any rights which Borrower may have to
funds which Borrower

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maintains on deposit with Lender (with the exception of funds deposited in
tax-deferred accounts), and agrees that Lender may, upon occurrence of an Event
of Default under the Credit Agreement and the expiration of any applicable grace
period allowed to cure the Event of Default, apply such funds on deposit with
Lender against the unpaid balance of this Note.

         This Note shall be governed by and construed in accordance with the
applicable laws of the State of Louisiana.

         THIS WRITTEN NOTE, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS
SET FORTH THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ALL PRIOR WRITTEN AND ORAL UNDERSTANDINGS BETWEEN THE
BORROWER, THE GUARANTOR, THE AGENT AND THE BANKS AND ANY OTHER PARTIES WITH
RESPECT TO THE MATTERS HEREIN SET FORTH.

         EXECUTED as of the date and year first above written.

                           PETROQUEST ENERGY, L.L.C.
                           a Louisiana limited liability company

                           By:  PETROQUEST ENERGY, INC.,
                                  a Delaware corporation, as sole member

                           By: /s/ Michael O. Aldridge
                              ---------------------------------------------
                           Name:   Michael O. Aldridge
                           Title:  Senior Vice President, Chief Financial
                                     Officer and Secretary

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                                                                    EXHIBIT 10.7

                               COMMERCIAL GUARANTY

         COMMERCIAL GUARANTY (this "Agreement") made and entered into as of May
11, 2001 by PETROQUEST ENERGY, INC., a Delaware corporation (hereinafter
referred to as "Guarantor"), in favor of HIBERNIA NATIONAL BANK, as Agent for
itself and each of the financial institutions ("Lenders") which now or hereafter
become a party to that certain Credit Agreement guarantying the Indebtedness (as
such terms are hereinafter defined) of PETROQUEST ENERGY, L.L.C., a Louisiana
limited liability company (hereinafter referred to as "Borrower").

                                   WITNESSETH:

         FOR VALUE RECEIVED, and in consideration of and for credit and
financial accommodations extended, to be extended, or continued to or for the
account of the above named Borrower, the undersigned Guarantor, whether one or
more, hereby jointly, severally and solidarily, agrees as follows:

         SECTION 1. CONTINUING GUARANTY OF BORROWER'S INDEBTEDNESS. Guarantor
hereby absolutely and unconditionally agrees to, and by these presents does
hereby, guarantee the prompt and punctual payment, performance and satisfaction
of any and all loans, extensions of credit and/or other obligations that
Borrower may now and/or in the future owe to and/or incur in favor of Lenders
under or pursuant to that certain Amended and Restated Credit Agreement dated of
even date herewith, by and among Borrower, Guarantor, Agent, and Lenders, as the
same may be amended and/or restated from time to time and in effect (the "Credit
Agreement"), including the indebtedness of Borrower evidenced by certain Notes
dated of even date herewith, in the maximum aggregate principal amount of
$100,000,000.00, executed by Borrower pursuant to the Credit Agreement, and any
and all renewals, extensions, substitutions, modifications and replacements of
said Notes from time to time and in effect, and whether such indebtedness and/or
obligations are absolute or contingent, liquidated or unliquidated, due or to
become due, secured or unsecured, and whether now existing or hereafter arising,
of any nature or kind whatsoever, up to a maximum principal amount outstanding
at any one or more times not to exceed ONE HUNDRED MILLION AND NO/100 DOLLARS
(U.S. $100,000,000.00), together with interest, costs and attorneys' fees
thereon (with all of Borrower's indebtedness and/or obligations being
hereinafter individually and collectively referred to under this Agreement as
"Borrower's Indebtedness" or the "Indebtedness").

         SECTION 2. LIMITATION ON LIABILITY. The liability of Guarantor
hereunder with respect to the Indebtedness shall be limited to the maximum
amount of liability that can be incurred without rendering this Commercial
Guaranty, as it relates to Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater amount.

         SECTION 3. JOINT, SEVERAL AND SOLIDARITY LIABILITY. Guarantor further
agrees that its obligations and liabilities for the prompt and punctual payment,
performance and satisfaction of all of Borrower's Indebtedness shall be on a
"joint and several" and "solidary" basis along with Borrower to the same degree
and extent as if Guarantor had been and/or will be

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a co-borrower, co-principal obligor and/or co-maker of all of Borrower's
Indebtedness. In the event that there is more than one guarantor under this
Agreement, or in the event that there are other guarantors, endorsers or
sureties of all or any portion of Borrower's Indebtedness, Guarantor's
obligations and liabilities hereunder shall be on a "joint and several" and
"solidary" basis along with such other guarantor or guarantors, endorsers and/or
sureties.

         SECTION 4. DURATION; CANCELLATION OF AGREEMENT. This Agreement and
Guarantor's obligations and liabilities hereunder shall remain in full force and
effect until such time as each and every Indebtedness of Borrower shall be paid,
performed and/or satisfied in full, in principal, interest, costs and attorneys'
fees, or until such time as this Agreement may be cancelled or otherwise
terminated by Lenders under a written cancellation instrument in favor of
Guarantor (subject to the automatic reinstatement provision hereinbelow). Unless
otherwise indicated under such a written cancellation instrument, Lenders'
agreement to terminate or otherwise cancel this Agreement shall only effect and
shall be expressly limited to Guarantor's continuing obligations and liabilities
to guarantee the prompt and punctual payment, performance and satisfaction of
Borrower's Indebtedness incurred, originated and/or extended or committed to by
Lenders after the date of such a written cancellation instrument; with Guarantor
remaining fully obligated and liable under this Agreement for the prompt and
punctual payment, performance and satisfaction of any and all of Borrower's then
outstanding Indebtedness together with continuing assessment of interest
thereon) that was incurred, originated, extended or committed to prior to the
date of such a written cancellation instrument. Nothing under this Agreement or
under any other agreement or understanding by and between Guarantor and Lenders,
shall in any way obligate, or be construed to obligate, Lenders to agree to the
subsequent termination or cancellation of Guarantor's obligations and
liabilities hereunder, it being fully understood and agreed by Guarantor that
Lenders may, within their sole and uncontrolled discretion and judgment, refuse
to release Guarantor from any of its obligations and liabilities under this
Agreement for any reason whatsoever as long as any of Borrower's Indebtedness
remains unpaid and outstanding.

         SECTION 5. DEFAULT OF BORROWER. Should Borrower default under any of
its Indebtedness in favor of Lenders as provided in the Credit Agreement,
Guarantor unconditionally and absolutely agrees to pay in full the then unpaid
amount of all of Borrower's Indebtedness guaranteed hereunder, in principal
interest, costs and reasonable attorneys' fees. Such payment or payments shall
be made immediately following demand by Lenders at Agent's offices at 313
Carondelet Street, New Orleans, Louisiana 70130. Guarantor hereby waives notice
of acceptance of this Agreement and of any Indebtedness to which it applies or
may apply. Guarantor further waives presentation and demand for payment of
Borrower's Indebtedness, notice of dishonor and of nonpayment, notice of
intention to accelerate, notice of acceleration, protest and notice of protest,
collection or institution of any suit or other action by Lenders in collection
thereof, including any notice of default in payment thereof or other notice to,
or demand for payment thereof on any party. Guarantor additionally waives any
and all rights and pleas of division and discussion as provided under Louisiana
law, as well as, to the degree applicable, any similar rights as may be provided
under the laws of any other state.

         SECTION 6. GUARANTOR'S SUBORDINATION OF RIGHTS TO LENDERS. In the event
that Guarantor should for any reason (i) make any payment for and on behalf of
Borrower under

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any of Borrower's Indebtedness, and/or (ii) make any payments to Lenders in
total or partial satisfaction of Guarantor's obligations and liabilities
hereunder, Guarantor hereby agrees that any and all rights that Guarantor may
have or acquire to collect or to be reimbursed by Borrower (or by any guarantor,
endorser or surety of Borrower's Indebtedness), whether Guarantor's rights of
collection or reimbursement arise by way of subrogation to the rights of Lenders
or otherwise, shall in all respects be subordinate, inferior and junior to
Lenders' rights to collect and enforce payment, performance and satisfaction of
Borrower's then remaining Indebtedness, until such time as all of Borrower's
Indebtedness is fully paid and satisfied. Upon the occurrence and continuance of
an Event of Default (as defined in the Credit Agreement) any and all amounts
owed by Borrower to Guarantor shall in all respects be subordinate, inferior and
junior to Lenders' rights to collect and enforce payment, performance and
satisfaction of Borrower's then remaining Indebtedness, until such time as all
of Borrower's Indebtedness is fully paid and satisfied. Guarantor further agrees
to refrain from attempting to collect and/or enforce any of Guarantor's
aforesaid rights against Borrower (or any other guarantor, surety or endorser of
Borrower's Indebtedness), arising by way of subrogation or otherwise, until such
time as all of Borrower's then remaining Indebtedness in favor of Lenders is
fully paid and satisfied, in principal, interest, costs and attorneys' fees.

         SECTION 7. ADDITIONAL COVENANTS. Guarantor further agrees that Lenders
may, at their sole option, at any time, and from time to time, without the
consent of or notice to Guarantor, or to any other party, and without incurring
any responsibility to Guarantor or to any other party, and without impairing or
releasing the obligations of Guarantor under this Agreement

                  (A) Discharge or release any party (including, but not limited
to, Borrower or any guarantor under this Agreement) who is or may be liable to
Lenders for any of Borrower's Indebtedness;

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

                  (C) Change the manner, place or terms of payment, or change or
extend the time of payment of or renew, as often and for such periods as Lenders
may determine, or after, any of Borrower's Indebtedness;

                  (D) Settle or compromise any of Borrower's Indebtedness;

                  (E) Subordinate and/or agree to subordinate the payment of all
or any of Borrower's Indebtedness or Lenders' security rights in and/or to any
collateral directly or indirectly securing any such indebtedness, to the payment
and/or security rights of any other present and/or future creditors of Borrower;

                  (F) Apply any sums paid to any of Borrower's Indebtedness,
with such payments being applied in such priority or with such preferences as
Lenders may determine in its sole discretion, regardless of what Indebtedness of
Borrower remains unpaid;

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                  (G) Take or accept any other security for any or all of
Borrower's Indebtedness; and/or

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

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

         SECTION 8. NO RELEASE OF GUARANTOR. Guarantor's obligations and
liabilities under this Agreement shall not be released, impaired, reduced or
otherwise affected by, and shall continue in full force and effect,
notwithstanding the occurrence of any event, including without limitation any
one of the following events:

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

                  (B) Partial payment or payments of any amount due and/or
outstanding under any of Borrower's Indebtedness;

                  (C) Any payment of Borrower or any other party to Lenders is
held to constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or for any reason, Lenders is required to refund such payment or
pay such amount to Borrower or to any other person;

                  (D) Any dissolution of Borrower or any sale, lease or transfer
of all or any part of Borrower's assets; and/or

                  (E) Any failure of Lenders to notify Guarantor of the
acceptance of this Agreement or of the making of loans or other extensions of
credit in reliance on this Agreement or of the failure of Borrower to make any
payment due by Borrower to Lenders.

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                  (F) Apply any sums paid to any of Borrower's Indebtedness,
with such payments being applied in such priority or with such preferences as
Lenders may determine in its own discretion, regardless of what Indebtedness of
Borrower remains unpaid;

                  (G) Take or accept any other security for any or all of
Borrower's Indebtedness; and/or

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

                  This Agreement and Guarantor's obligations and liabilities
hereunder shall continue to be effective, and/or shall automatically and
retroactively be reinstated if a release or discharge has occurred, as the case
may be, if at any time any payment or part thereof to Lenders with respect to
any of Borrower's Indebtedness is rescinded or must otherwise be restored by
Lenders pursuant to any insolvency, bankruptcy, reorganization, receivership, or
any other debt relief granted to Borrower or to any other party. In the event
that Lenders must rescind or restore any payment received by Lenders in
satisfaction of Borrower's Indebtedness, any prior release or discharge from the
terms of this Agreement given to Guarantor shall be without effect, and this
Agreement and Guarantor's obligations and liabilities hereunder shall
automatically be renewed or reinstated and shall remain in full force and effect
to the same degree and extent as if such a release or discharge was never
granted. It is the intention of Lenders and Guarantor that Guarantor's
obligations and liabilities hereunder shall not be discharged except by
Guarantor's full and complete performance of such obligations and liabilities
and then only to the extent of such performance.

         SECTION 9. ENFORCEMENT OF GUARANTOR'S OBLIGATIONS AND LIABILITIES.
Guarantor agrees that, should Lenders deem it necessary to file an appropriate
collection action to enforce Guarantor's obligations and liabilities under this
Agreement, Lenders may commence such a civil action against Guarantor without
the necessity of first (i) attempting to collect Borrower's Indebtedness from
Borrower or from any other guarantor, surety or endorser, whether through filing
of suit or otherwise, (ii) attempting to exercise against any collateral
directly or indirectly securing repayment of any of Borrower's Indebtedness,
whether through the filing of an appropriate foreclosure action or otherwise, or
(iii) including Borrower or any other guarantor, surety or endorser of any of
Borrower's Indebtedness as an additional party defendant in such a collection
action against Guarantor. If there is more than one guarantor under this
Agreement, each guarantor additionally agrees that Lenders may file an
appropriate collection and/or enforcement action against any one or more of
them, without impairing the rights of Lenders against any other guarantor under
this Agreement. In the event that Lenders should ever deem it necessary to refer
this Agreement to an attorney-at-law for the purpose of enforcing Guarantor
obligations and liabilities hereunder, or of protecting or preserving Lenders'
rights hereunder, Guarantor (and each of them, on a joint, several and solidary
basis) agrees to reimburse Lenders for the reasonable fees of such an attorney.
Guarantor additionally agrees that Lenders shall not be liable for failure to
use diligence in the collection of any of Borrower's Indebtedness or any
collateral security therefor, or in creating or preserving the liability of any

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person liable on any such Indebtedness, or in creating, perfecting or preserving
any security for any such Indebtedness.

         SECTION 10. ADDITIONAL DOCUMENTS. Upon the reasonable request of
Lenders, Guarantor will, at any time, and from time to time, duly execute and
deliver to Lenders any and all such further instruments and documents, and
supply such additional information as may be reasonably necessary or advisable
in the opinion of Lenders, to obtain the full benefits of this Agreement.

         SECTION 11. TRANSFER OF INDEBTEDNESS. This agreement is for the benefit
of Lenders and for such other person or persons as may from time to time become
or be the holders of any of Borrower's Indebtedness hereby guaranteed and this
Agreement shall be transferable and negotiable, with the same force and effect
and to the same extent as Borrower's Indebtedness may be transferable under
Sections 16.7 and 16.9 of the Credit Agreement, it being understood that, upon
the transfer or assignment by Lenders of any of Borrower's Indebtedness hereby
guaranteed, the legal holder of such Indebtedness shall have all the rights
granted to Lenders under this Agreement.

                  Guarantor hereby recognizes and agrees that Lenders may, from
time to time, one or more times, transfer all or any portion of Borrower's
Indebtedness to one or more third parties. Such transfers may include, but are
not limited to, sales of a participation or syndication interest in such
Indebtedness in favor of one or more third parties in accordance with Section 29
of the Credit Agreement. Guarantor specifically agrees and consents to all such
transfers and assignments in accordance with Sections 16.7 and 16.9 of the
Credit Agreement and Guarantor further waives any subsequent notice of and right
to consent to any such transfers and assignments as may be provided under
applicable Louisiana law. Guarantor additionally agrees that the purchaser of a
syndication interest in Borrower's Indebtedness will be considered as the
absolute owner of an interest in, or a percentage interest of, such Indebtedness
and that such a purchaser shall have all of the rights granted to the purchaser
under any agreement governing the sale of such a syndication interest and all
rights of Lenders from whom the syndication interest was purchased under the
Credit Agreement. Guarantor further waives any right of offset that Guarantor
may have against Lenders and/or any purchaser of such a participation or
syndication interest in Borrower's Indebtedness and Guarantor unconditionally
agrees that either Lenders or such a purchaser may enforce Guarantor's
obligations and liabilities under this Agreement, irrespective of the failure or
insolvency of Lenders or any such purchaser. Guarantor further agrees that, upon
any transfer, in accordance with Sections 16.7 and 16.9 of the Credit Agreement,
of all or any portion of Borrower's Indebtedness, Lenders may transfer and
deliver any and all collateral securing repayment of such Indebtedness
including, but not limited to, any collateral provided by Guarantor) to the
transferee of such Indebtedness and such collateral (again, including but not
limited to Guarantor's collateral) shall secure any and all of Borrower's
Indebtedness in favor of such transferee. Guarantor additionally agrees that,
after any such transfer or assignment has taken place in accordance with Section
29 of the Credit Agreement, Lenders shall be fully discharged from any and all
liability and responsibility to Borrower (and Guarantor) with respect to such
collateral, and the transferee thereafter shall be vested with all the powers
and rights with respect to such collateral.

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<PAGE>   7

         SECTION 12. RIGHT OF OFFSET. As collateral security for the repayment
of Guarantor's obligations and liabilities under this Agreement, Guarantor
hereby grants Lenders, as well as their successors and assigns, the right to
apply, upon the occurrence of an Event of Default under the Credit Agreement and
the expiration of any applicable grace period allowed to cure the Event of
Default, any and all funds that Guarantor may then have on deposit with or in
the possession or control of any Lender and its successors or assigns (with the
exception of funds deposited in IRA, pension or other tax-deferred deposit
accounts), towards repayment of any of Borrower's Indebtedness subject to this
Agreement.

         SECTION 13. CONSTRUCTION. The provisions of this Agreement shall be in
addition to and cumulative of, and not in substitution, novation or discharge
of, any and all prior or contemporaneous guaranty or other agreements by
Guarantor (or any one or more of them), in favor of Lenders or assigned to
Lenders by others, all of which shall be construed as complementing each other.
Nothing herein contained shall prevent Lenders from enforcing any and all such
guaranties or agreements in accordance with their respective terms.

         SECTION 14. AMENDMENT. No amendment, modification, consent or waiver of
any provision of this Agreement, and no consent to any departure by Guarantor
therefrom, shall be effective unless the same shall be in writing signed by a
duly authorized officers of the required percentage of Lenders pursuant to the
Credit Agreement, and then shall be effective only to the specific instance and
for the specific purpose for which given.

         SECTION 15. SUCCESSORS AND ASSIGNS BOUND. Guarantor's obligations and
liabilities under this Agreement shall be binding upon Guarantor's successors,
heirs, legatees, devisees, administrator executors and assigns. The rights and
remedies granted to Lenders under this Agreement shall also inure to the benefit
of Lenders' successors and assigns, as well as to any and all subsequent holder
or holders of any of Borrower's Indebtedness subject to this Agreement.

         SECTION 16. CAPTION HEADING. Caption headings of the section of this
Agreement are for convenience purposes only and are not to be used to interpret
or to define their provisions. In this Agreement, whenever the context so
requires, the singular includes the plural and the plural also includes the
singular.

         SECTION 17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF LOUISIANA.

         SECTION 18. SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof; such provision shall be fully severable, this Agreement
shall be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of

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<PAGE>   8

this Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and legal, valid and enforceable.

         IN WITNESS WHEREOF, Guarantor has executed this Agreement in favor of
Lenders on the day, month, and year first written above.

                           GUARANTOR:
                           PETROQUEST ENERGY, INC.
                           a Delaware corporation

                           By:
                              ------------------------------------
                           Name:  Michael O. Aldridge
                           Title: Senior Vice President,
                                  Chief Financial Officer and
                                  Secretary

                                      -8-
<PAGE>   9

ACCEPTED:
HIBERNIA NATIONAL BANK
AS AGENT FOR ITSELF
AND THE LENDERS

By:                                                         DATE: May 11, 2001
   --------------------------------
Name:  David R. Reid
Title: Senior Vice President

                                      -9-

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