PetroQuest Energy Inc. has added more than 17,000 net acres to its leasehold in the Fayetteville Shale trend of the Arkoma Basin, and the company said Tuesday it plans to continue to expand its position there. The company also is considering “strategic alternatives” for its natural gas gathering systems, which are in the middle of the Woodford Shale trend of the Arkoma Basin in southeastern Oklahoma.

Most of the new acreage, which is located primarily in Van Buren County, AR, was acquired through several transactions in 3Q2006, the company said. Drilling activity in the Fayetteville Shale is scheduled to increase over the next several months through participation in several nonoperated horizontal wells.

CEO Charles T. Goodson said the new acreage “solidifies the company in two of the most prominent resource plays in North America.” The Fayetteville leasehold, he said, “could ultimately create as much upside as our Woodford position.”

In the second quarter, PetroQuest drilled 12 successful wells, including seven wells in the Woodford Shale, four in its Carthage, TX, holdings, and one well in the Toms Prospect in East Texas. PetroQuest’s output reached 86 MMcfe/d in the quarter, which was 20% higher than production a year earlier and 9.1% higher sequentially from the first three months of this year. Excluding its new leasehold in the Fayetteville Shale, PetroQuest earlier this year estimated its full-year 2007 production to be 82-87 MMcfe/d, which would be 20% higher than in 2006.

PetroQuest also is evaluating whether to sell 180 miles of gathering systems in the Woodford Shale. Current throughput is about 30 MMcf/d. The company does not expect to publicly disclose any more information “until a definitive transaction is entered into or the process is completed,” it said. “There can be no assurances that any particular alternative will be pursued or that any transaction will occur, or on what terms, or as to the timing of any transaction.”

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