PETROQUEST ENERGY, INC. LONG-TERM CASH INCENTIVE PLAN PERFORMANCE UNIT NOTICE AND AWARD

Grant of Performance Unit. Pursuant to Section 4.6 of the Plan, the Company hereby grants the Participant an Award consisting of the number of Target Performance Units specified on the Grant Detail Report. Each Performance Unit represents the value of one Share of Common Stock. The number of Performance Units that the Participant will actually earn (which may be up to 200% of the Target Performance Units) will be determined by the level of achievement of the performance goals set forth in Section 3 hereof. Upon the certification by the Committee of the level of achievement of the performance goals for a Performance Period, the Performance Units earned, if any, as determined by the Committee, will vest according to the vesting schedule specified in Section 4 hereof.

Incorporation by Reference. All provisions of the Plan are hereby incorporated herein by reference. This Award shall be construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Award shall have the definitions set forth in the Plan. The Committee shall have the authority to interpret and construe the Plan and this Award and to make any and all determinations thereunder, and its decision shall be binding and conclusive upon the Participant and his or her legal representative in respect of any questions arising under the Plan or this Award.

Earning of Performance Units.

Vesting Dates. The Performance Units earned as determined by the Committee at the end of the Performance Period will vest on the “Vesting Dates” as follows: (a) 33.3% on the first day of the calendar year following the end of the Performance Period, (b) 33.3% on the first day of the second calendar year following the end of the Performance Period and (c) 33.4% on the first day of the third calendar year following the end of the Performance Period. In the event of a Change in Control prior to the end of the Performance Period, all performance goals will be deemed to be achieved at the Target Level, subject to the Participant’s continued employment with the Company or Affiliate through the date of the Change in Control. In the event of a Change in Control at any time, the Performance Units awarded hereunder shall vest in accordance with the terms of the Plan and such date will be the Vesting Date under this Award. In addition, if the Participant separates from service with the Company and its Affiliates due to Retirement, as defined below, after the end of the Performance Period and after the certification specified in Section 3(d), the vesting of all earned Performance Units will be accelerated to the amount that would otherwise vest, if any, on the next Vesting Date (other than a Vesting

Payment.

Tax Withholding. This Award is subject to all applicable federal, state and local taxes (domestic and foreign) and the Company shall have the right to withhold from any payment due under the Plan and this Award an amount equal to the minimum required withholding obligation in respect of any federal, state or local taxes (domestic and foreign).

No Rights as Stockholder. The Participant shall have no rights as a stockholder with respect to the Shares of Common Stock underlying the Performance Units.

Compliance with Laws and Regulations. The issuance and transfer of the Performance Units shall be subject to compliance by the Company and the Participant with all applicable requirements of securities laws and with all applicable requirements of any stock exchange on which the Company’s Common Stock may be listed at the time of such issuance or transfer.

No Right to Continuous Employment or Service. Nothing in this Award shall be deemed by implication or otherwise to impose any limitation on any right of the Company or any of its Affiliates to terminate the Participant’s employment or service at any time.

Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first class mail, return receipt requested, telecopier, courier service or personal delivery:

Bound by Plan. This Award is governed by the Plan and all terms of the Plan shall control. By signing or electronically accepting this Award, the Participant acknowledges that he or she has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all of the terms and provisions of the Plan.

Beneficiary. The Participant may file with the Committee a written designation of a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the legal representative of the Participant’s estate shall be deemed to be the Participant’s beneficiary.

Successors. The terms of this Award shall be binding upon and inure to the benefit of the Company, its successors and assigns, and on the Participant and the beneficiaries, executors, and heirs of the Participant.

Amendment of Performance Unit Award. Subject to the Plan, including without limitation adjustments under Section 5 of the Plan, the Committee at any time and from time to time may amend the terms of this Award; provided, however, that the Participant’s rights under this Award shall not be impaired by any such amendment unless the Participant consents in writing to such amendment.

Governing Law. This Award shall be construed and interpreted in accordance with the laws of the State of Delaware without regard to principles of conflicts of law thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware.

Severability. Every provision of this Award is intended to be severable and any illegal or invalid term shall not affect the validity or legality of the remaining terms.

Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation of construction, and shall not constitute a part of this Award.

Code Section 409A. The Committee shall to the extent applicable interpret and construe this Award to comply with Code Section 409A, and to the extent required a Change in Control shall be limited to a Change in Control that complies with Code Section 409A. The Committee may interpret or amend this Award to comply with Code Section 409A without the Participant’s consent even if such amendment would have an adverse effect on this Award. To the extent required under Code Section 409A, in the case of any Participant who is specified employee, a distribution on account of a separation from service may not be made before the date which is six months after the date of the Participant’s separation from service (or, if earlier, the date of the Participant’s death). For purposes of the foregoing and to the extent required by Code Section 409A with respect to an Award, the terms “separation from service” and “specified employee” all shall be defined in the same manner as those terms are defined for purposes of Section 409A of the Code, and the limitations set forth herein shall be applied in such manner (and only to the extent) as shall be necessary to comply with any requirements of Section 409A of the Code that are applicable to the Award as determined by the Committee. Furthermore, to the extent required under Code Section 409A, none of the Company, the Committee or Board shall have any discretion otherwise provided in the Plan to the extent such discretion is prohibited under Code Section 409A for compliance with Code Section 409A with respect to deferred compensation including, without limitation, any discretion to accelerate or substitute under Section 5.5 of the Plan or determine an event is or is not a Change in Control. Notwithstanding the foregoing, none of the Company, any Affiliate or any officer, director, employee, Shareholder or any agent of any of them guarantees or is responsible for the tax consequences to a Participant with respect to this Award under the Plan and the administration of the Plan, including without limitation, any excise or penalty tax or interest under Code Section 409A.

Signature in Counterparts and Electronic Means. This Award may be signed in counterparts, each of which shall be deemed an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Award may be provided by electronic means and electronic signature for consent and acceptance are permitted.