PURCHASE AND SALE AGREEMENT

Exhibit 2.1

PURCHASE AND SALE AGREEMENT
Non-Operated Properties

      This Purchase and Sale Agreement (this “Agreement”) dated as of the 13th day of April, 2005, executed by Staab Holdings, L.L.C. , an Oklahoma limited liability company, (“Seller”), and PetroQuest Energy, L.L.C., a Louisiana limited liability company (the “Buyer”).

     In consideration of the mutual promises contained herein, the benefits to be derived by each party hereunder and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:

ARTICLE I
INTENT AND DEFINED TERMS

     1.1 Intent. Through a distribution and assignment from TAG Team Resources, L.L.C. (“TAG Team”), Seller has acquired a non-operating, undivided fifty percent (50%) interest of TAG Team’s interest in certain Oklahoma properties located in Pittsburg and various other Oklahoma counties as set forth on Exhibit A and Exhibit A-1 . Seller desires to sell and Buyer desires to buy all of Seller’s right, title and interest in such properties in accordance with the terms and conditions hereof. TAG Team shall retain the remaining undivided fifty percent (50%) interest in the properties (the “TAG Team Properties”). Seller intends to obtain a preferential right to purchase the TAG Team Properties and the preferential right shall be assigned unconditionally to Buyer at Closing.

     1.2 Defined Terms. Unless the context otherwise requires, the following terms used in this Agreement shall have the meanings assigned to them in this Section 1.2 :

          “ AFE(s) ” means Authorizations for Expenditures.

          “ Allocated Value ” means the allocated value of each of the Assets as shown on Exhibit A and Exhibit A-1 .

          “ British Thermal Unit ” or “ Btu ” shall mean the amount of heat required to raise the temperature of one pound of water one (1) degree from 59 to 60 degrees Fahrenheit. “ MMBtu ” shall mean 1,000,000 Btu’s.

          “ Code ” means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder by the Treasury Department of the United States.

          “ Contracts ” shall mean any and all existing operating agreements, unit agreements, gas purchase and sales contracts, oil sales contracts, gas transportation and processing contracts, farmin agreements, farmout agreements, exploration agreements, leasehold acquisition agreements (including associated area of mutual interest rights and provisions), joint venture agreements, saltwater disposal agreements, and all other agreements (i) related to or associated with the

Properties, and (ii) customary in the oil and gas exploration, development, production or extraction business or in the business of processing and/or marketing of hydrocarbons produced therefrom, including, without limitation, those set forth in Schedule 3.1(j) and Schedule 3.1(k) hereto.

          “ Defect Date ” shall mean 5:00 p.m., Central Standard Time on the fifth (5 ^th ) calendar day prior to the Closing Date.

          “ Defects ” shall collectively refer to Title Defects and Environmental Defects asserted by Buyer pursuant to this Agreement.

          “ Defect Threshold ” shall mean, (i) for each individual Property, Defects asserted by Buyer that adversely affect such Property by an amount equal to or in excess of $10,000, and (ii) for the Assets taken as a whole, Defects asserted by Buyer that adversely affect Seller and/or the Assets by an amount equal to or in excess of $200,000.

          “ Defensible Title ” means such title of Seller that, subject to and except for the Permitted Encumbrances:

          (i) renders a Property free from reasonable doubt to the end that a prudent person engaged in the business of purchasing and owning, developing, and operating producing oil and gas properties with knowledge of all of the facts and their legal bearing would be willing to accept the same;

          (ii) entitles Seller to receive not less than the net revenue interest (“NRI”) set forth for each Property ( e.g., well interest, unit interest or leasehold interest, as applicable) on Exhibit A , subject to the limitations as to depths or formations, if any, set forth in Exhibit A or Exhibit A-1 ;

          (iii) obligates Seller to bear costs and expenses relating to the maintenance, development, operation and the production of oil and gas from each Property ( e.g., well interest, unit interest or leasehold interest, as applicable) in an amount not greater than the working interest (“WI”) therefor as set forth on Exhibit A without a corresponding increase in the NRI for such Property; and

          (iv) renders the Asset free and clear of encumbrances, liens and defects that would create a material impairment of use and enjoyment of or loss of interest in the affected Asset.

          “ Effective Date ” shall mean 12:01 a.m. on October 1, 2004.

          “ Environmental Defect ” shall mean that, with respect to the Asset in question, (i) any hazardous substances (as defined in 42 U.S.C.A. 9601(14) or 42 U.S.C.A. 69021(B)(2)) are present, stored or located on or in conjunction with an Asset in violation of Environmental Laws; or (ii) any Asset is in noncompliance with Environmental Laws, to the extent that any of the foregoing arise out of or pertain to operations conducted on, or ownership of, the Assets prior to the Closing Date.

          “ Governmental Entity ” means any court or tribunal in any jurisdiction (domestic or foreign) or any public, governmental, or regulatory body, agency, department, commission, board, bureau, or other authority or instrumentality (domestic or foreign).

          “ Interim Period ” means the period of time between the execution of this Agreement and the Closing Date.

          “ Material Adverse Effect ” means, with respect to a Person, the occurrence of an event or the existence of a circumstance (other than general industry conditions, or matters of a general economic or political nature) that has a material adverse effect on such Person’s assets, business or financial condition, taken as a whole.

          “ NRI ” shall have the meaning given it in this Section 1.2 within the definition of Defensible Title.

          “ Permitted Encumbrances ” shall mean:

          (i) lessors’ royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens, if the net cumulative effect of all such burdens does not operate to reduce the NRI for a particular Property below that set forth on Exhibit A ;

          (ii) any preferential rights to purchase and required third party consents to assignments of contracts and similar agreements for which written waivers or consents are obtained prior to Closing;

          (iii) liens for taxes or assessments not yet due or not yet delinquent or, if delinquent, that are being contested in good faith in the normal course of business;

          (iv) all rights to consent by, required notices to, filings with, or other actions by federal, state or local entities in connection with the sale or conveyance of any Asset if the same are customarily obtained subsequent to such sale or conveyance;

          (v) easements, rights-of-way, servitudes, permits, surface Leases and other rights with respect to surface operations, on, over or in respect of any of the Assets or any restriction on access thereto and that do not materially interfere with the operation of the affected Assets;

          (vi) such Title Defects as Buyer has waived in writing or through its failure to timely assert the same, as herein provided;

          (vii) materialmens’, mechanics’, repairmens’, employees’, contractors’, operators’ or other similar liens or charges arising in the ordinary course of business incidental to construction, maintenance or operation of the Assets (i) if they have not been filed pursuant to law and the time for filing them has expired, (ii) if filed, they have not yet become due and payable or payment is being withheld as provided by law, or (iii) if their

validity is being contested in good faith by appropriate action and payment to discharge the same has been placed by Seller in escrow;

          (viii) rights reserved to or vested in any Governmental Entity to control or regulate any of the Assets in any manner, and all applicable laws, rules, regulations and orders of general applicability in the area;

          (ix) liens arising under operating agreements, unitization and pooling agreements and production sales contracts securing amounts not yet due or, if due, being contested in good faith in the ordinary course of business and payment to discharge the same has been placed by Seller in escrow;

          (x) division orders and sales contracts terminable without penalty upon no more than 90 days notice to the Buyer; and

          (xi) all other liens, charges, encumbrances, contracts, agreements, instruments, obligations, defects, and irregularities affecting the Assets to which they relate that, individually or in the aggregate:

               (a) do not reduce the interest of Seller with respect to the oil and gas produced from any unit or well to which a Property relates below the NRI set forth in Exhibit A for the Properties to which such unit or well relates; or

               (b) do not increase Seller’s portion of the costs and expenses relating to the operations on and the maintenance and development of the lands and depths included in any unit or well to which the Properties relate above the WI set forth in Exhibit A for the Properties to which such unit or well relates.

     “ Person ” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, enterprise, unincorporated organization, or Governmental Entity.

     “ Title Defect ” means any encumbrance, encroachment, irregularity, defect in or objection to title in and to the Assets, or any portion thereof, excluding Permitted Encumbrances, that alone or in combination with other defects renders Seller’s title less than Defensible Title.

     “ WI ” shall have the meaning given it in this Section 1.2 within the definition of Defensible Title.

     1.3 Additional Definitions. The following terms are defined in the Section referenced below:

ARTICLE II
PURCHASE PRICE AND ALLOCATION

     2.1 Purchase Price . Seller shall sell and Buyer shall purchase, effective as of the Effective Date, for the sum of Seventeen Million and No/l00 Dollars ($17,000,000), subject to adjustments as provided or contemplated herein (the “Base Purchase Price”) all of Seller’s right, title, interest and estate in and to the following:

(a) All of Seller’s right, title and interest in and to the wells (the “Wells”) described in Exhibit A and the land and properties described in Exhibit A-1 (the “Lands”) attached hereto and made a part hereof for all purposes;

(b) Without limitation of the foregoing, all other right, title and interest (of whatever kind or character, whether legal or equitable, and whether vested or contingent) of Seller in and to the oil, gas and other minerals in and under or that may be produced from the Lands and the lands described in the instruments and documents listed on Exhibit A and Exhibit A- 1 hereto and the wells located on such Lands or lands, including without limitation the Wells

described in Exhibit A (including interests in oil, gas and/or mineral leases covering all or a part of such Lands, lands and Wells (the “Leases”) and overriding royalties, production payments and net profits interests in such Lands, Leases and Wells, and fee mineral interests, mineral servitudes, fee royalty interests and other fee interests (such fee interests, the “Mineral Interests”) in such oil, gas and other minerals), whether such lands be described in a description set forth in Exhibit A or Exhibit A-1 or be described in such Exhibit A or Exhibit A-1 by reference to another instrument, even though Seller’s interest in such oil, gas and other minerals may be incorrectly described in, or omitted from, Exhibit A or Exhibit A-1 ;

(c) All rights, titles and interests of Seller in and to, or otherwise derived from, all oil, gas and/or mineral unitization, pooling, and/or communitization agreements, declarations and/or orders (the “Units”) which apply to the Lands, whether or not expressly set forth on Exhibit A or Exhibit A-1 and in and to the properties covered and the units created thereby (including all units formed under orders, rules, regulations, or other official acts of any federal, state, or other authority having jurisdiction, voluntary unitization agreements, designations and/or declarations) relating to the properties described in paragraphs (a) and (b) above;

(d) Copies of all rights, titles and interests of Seller in and to all production sales (and sales related) Contracts, transportation and/or processing agreements, operating agreements, farmout agreements and other agreements and Contracts which relate to any of the properties described in paragraphs (a), (b) and (c) above, or which relate to the exploration, development, operation, or maintenance thereof or the treatment, transportation or marketing of production therefrom (or allocated thereto) including without limitation the agreements and Contracts which are set forth on Schedule 3.1(j) and Schedule 3.1(k) ;

(e) All rights, titles and interests of Seller in and to (i) all equipment, improvements and other personal property and fixtures (including but not by way of limitation, wellhead equipment, pumping units, flowlines, tanks, injection facilities, saltwater disposal facilities, compression facilities and other equipment) located on and used in connection with the Lands, Leases and/or Wells (the “Equipment”), and (ii) all easements, rights-of-way, surface leases and other surface rights, all permits and licenses, and all other appurtenances located on and used in connection with the Lands, Leases and/or Wells;

(f) At Buyer’s expense, copies of any and all of Seller’s lease files, abstracts and title opinions, production records, well files, accounting records (but not including general financial accounting records), seismic records and surveys, gravity maps, electric logs, geological or geophysical data, and other records, documents and files of every kind and description which relate to the properties described above; provided, however, the foregoing shall not include any files, records, data or information which is attorney work product or subject to attorney client privilege or any files, records, data or information which by agreement Seller is required to keep confidential except and to the extent a waiver in writing is obtained of any such confidentiality requirements (the “Records”). Seller shall assist Buyer in obtaining any and all such Records from TAG Team, being the holder of such Records; and

(g) The oil, gas, coalbed methane, casinghead gas, condensate, distillate, liquid hydrocarbon, and gaseous hydrocarbons produced on or after the Effective Date, products refined and manufactured therefrom, and the accounts and proceeds from the sale of the foregoing to the extent attributable to the Properties.

The properties and interests specified in the foregoing paragraphs (a), (b) and (c) are sometimes collectively referred to as the “Properties” and the total of the properties and interests specified in the foregoing paragraphs (a) through (g) are sometimes collectively referred to as the “Assets”.

     2.2 Adjustments to Base Purchase Price . The Base Purchase Price shall be subject to adjustment as follows:

     (a) Upward Adjustments . The Purchase Price shall be adjusted upward by the following:

     (i) The value of all merchantable, allowable oil in storage at the Effective Date allocable to the Properties, above the pipeline connection;

     (ii) The amount of all verifiable expenditures under Contracts, applicable operating agreements or other similar arrangements or agreements paid by Seller in connection with the operation of the Assets in accordance with this Agreement for work actually performed on or subsequent to the Effective Date;

     (iii) The amount of all capital expenditures made by Seller for the drilling of a new Well or recompletion, rework or other existing Well operation, incurred on or after the Effective Date and consented to by Buyer;

     (iv) An amount equal to the sum of all Imbalance Entitlements allocable to the Properties outstanding as of the Effective Date; and

     (v) Any other amount agreed upon by Seller and Buyer in writing.

     (b) Downward Adjustments . The Base Purchase Price shall be adjusted downward by the following:

     (i) Proceeds received by Seller from the sale of oil, gas or other hydrocarbons attributable to the Properties and which are produced on and after the Effective Date;

     (ii) An amount equal to all unpaid ad valorem, property, production, severance and similar taxes and assessments (but not including income taxes) based upon or measured by the ownership of Assets or the production of hydrocarbons or the receipt of proceeds therefrom accruing to the Assets prior to the Effective Date;

     (iii) An amount equal to all sums received by Seller with respect to Prepayment Obligations, Refund Obligations or Imbalance Obligations to the extent,

and only to the extent, that such sums apply to periods of ownership and/or production of the Assets on or after the Effective Date;

     (iv) Any reductions for Defects, allocable to the Assets, as provided in Article V , such reduction to be offset by any Title Increases pursuant to Section 5.5 ;

     (v) Any Casualty Losses allocable to the Assets as provided in Section 5.6 ;

     (vi) Any other amount agreed upon by Seller and Buyer in writing.

     2.3. Purchase Price Adjustment Statement . Seller shall submit a Closing statement (the “ Purchase Price Adjustment Statement ”) to Buyer not fewer than seven (7) business days prior to Closing, and shall afford Buyer access to any Records pertaining to the computations contained in the Purchase Price Adjustment Statement. At least two (2) full business days prior to Closing, Buyer shall deliver to Seller a written report containing such changes, if any, which Buyer proposes be made to the Purchase Price Adjustment Statement. Seller and Buyer shall each make every reasonable effort to agree prior to the Closing Date on a mutually agreed Purchase Price Adjustment Statement.

     2.4 Payment at Closing . After the Purchase Price Adjustment Statement has been agreed to by the parties, the Purchase Price due at Closing shall be tendered by Buyer to Seller, by wire transfer in accordance with Seller’s instructions. Seller shall provide Buyer wire transfer instructions not later than three (3) days prior to the Closing Date.

     2.5 Final Settlement. As soon as practicable after the Closing Date, but in any event within 120 calendar days thereafter (the “ Final Settlement Period ”), Buyer shall prepare and submit to Seller a proposed statement (herein called the “ Final Statement ”), which shall show the final calculation of the Purchase Price (herein called the “ Final Settlement Price ”). As soon as possible after receipt of the Final Statement, but in any event within 15 calendar days after receipt thereof, Seller shall deliver to Buyer a written report containing the changes, if any, which Seller proposes being made to the Final Statement. In the event no response is made by Seller within such 15-day period, it shall be conclusively presumed that the selling parties concur with the Final Statement, and such Final Statement shall be the basis for the Final Settlement Price. In the event that Seller submits a response, the parties shall exercise all reasonable efforts to agree upon a mutually acceptable Final Settlement Price and the calculation of the amount, if any, due in connection therewith not later than 150 calendar days after the Closing (herein called the “ Final Settlement Date ”). After agreement upon a Final Settlement Price setting forth the amount by which the Base Purchase Price shall be adjusted (either upward or downward) has been reached, the amount due shall be paid within five (5) business days thereafter by the party owing the same by confirmed wire transfer to a bank account or accounts to be designated by the appropriate party. In the event Buyer and Seller are unable to agree with respect to the amounts due pursuant to this Section 2.5 before the Final Settlement Date, then either Seller or Buyer may refer the issues in dispute to the Grant Thornton LLP, Tulsa, Oklahoma accounting firm (or such other recognized firm of public accountants as Seller and Buyer may mutually agree) and the resolution of such issues by such firm

shall be final and binding on all parties. The costs of such public accountants shall be borne equally by the Seller and Buyer.

     2.6 Allocation of Purchase Price . The Allocated Value of Seller’s interest in each of the Properties is set forth on Exhibit A hereto. The Allocated Values are for purposes of adjustment of the Base Purchase Price. Buyer and Seller will each make their own allocation for tax purposes.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of Seller . Seller represents and warrants to Buyer and its subsidiaries or designees, if any, to whom the Assets are to be assigned at Closing, as follows.

     (a) Organization and Standing . Seller is a limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, is legally authorized to conduct business in each jurisdiction where it conducts business, and has all requisite power and authority to own and maintain the Assets and to carry on its business as such business is currently conducted.

     (b) Authorization and Enforceability . Seller has all requisite individual power and authority to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform all the terms and conditions hereof to be performed by Seller. This Agreement has been duly executed and delivered by Seller and constitutes the valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or similar laws relating to or affecting the enforcement of creditors rights generally and general principles of equity.

     (c) No Conflict . This Agreement and the execution and delivery hereof by Seller does not, and the fulfillment and compliance with the terms and conditions hereof and the consummation of the transactions contemplated hereby will not:

     (d) No Default . Seller is not in default under, and no condition exists that with notice or lapse of time or both would constitute a default under (i) any mortgage, indenture, loan, credit agreement or other agreement or instrument evidencing indebtedness for borrowed money to which Seller is a party or by which Seller is bound or to which any of the Assets are subject, or any other agreement, contract, lease, license, or other instrument, (ii) any order, judgment or decree of any court, commission, board, agency or other governmental body, or (iii) any law, statute, ordinance, decree, order, rule or regulation of any governmental authority.

     (e) Title to Assets . Seller has Defensible Title to the Properties, free and clear of all liens, mortgages, encumbrances and claims of any kind or character. Assignment of the Assets shall be by, through and under Seller, but not otherwise.

     (f) Regulatory Matters . Seller has not received any notice or order from any Governmental Entity which regulates or purports to regulate any of the Assets or Seller or any of his activities, except pertaining to usual and customary filing requirements applicable to assets of the types owned by Seller.

     (g) Taxes . There are no pending or threatened state, local or foreign tax liens upon any of the Assets. All taxes, assessments, fees and other charges of any Governmental Entity which have been assessed against the Assets and have become due and payable, have been paid. All ad valorem, gross production, severance, excise, or similar taxes relating to Seller’s ownership of any of the Properties prior to the Effective Date have been or will be timely paid by Seller.

     (h) Litigation . Except as and to the extent set forth in Schedule 3.1(h) , there are no administrative and judicial actions and proceedings presently pending or threatened against or involving (i) Seller, or (ii) the Assets or any portion thereof.

     (i) Compliance with Laws . Except as and to the extent set forth in Schedule 3.1(i) hereto (i) to Seller’s knowledge, Seller is in compliance in all material respects with all applicable statutes, orders, rules and regulations promulgated or proposed by any federal, state or local governmental entity relating to the operation and conduct of the Assets, (ii) except for obligations to properly plug and abandon non-producing Wells, and related obligations, there are no such statutes, orders, rules or regulations which require material future actions or expenditures by or on behalf of Seller; (iii) Seller has not received any notice of alleged material violation of any such statute, order, rule or regulation; and (iv) all material business and other licenses, permits, performance bonds and other security and authorizations required by law for the ownership and/or operation of the Assets and/or Seller’s conduct of his business or operations respecting the Assets have been obtained and Seller is in material compliance with such licenses, permits, bonds, and other authorizations.

     (j) Contracts . Schedule 3.1(j) hereto is a list of all Contracts (written or oral) to which Seller is a party or by which Seller is bound, having a duration in excess of one (1) month or involving payments (or other value) in excess of $5,000. Seller has complied in all material respects with the provisions of all such Contracts, and is not in default thereunder in any manner which would permit any other party thereto to cancel or terminate such Contract; and, all such Contracts are in full force and effect and constitute legal, valid and binding obligations of Seller, and to Seller’s knowledge, are binding upon the other parties to such Contract in accordance with their terms; and, as of the date hereof, there is no claimed breach of contract by any party to any such Contract.

     (k) Production Sales Contracts; Future Sales Contracts . Except as set forth on Schedule 3.1(k) hereto, the Properties are not subject to any contracts for the sale of oil or gas attributable to periods from and after the Effective Date, other than agreements that are terminable, without penalty, upon not more than thirty (30) days’ notice. Seller is not under any obligation under any production sales contract, take-or-pay clause, or any similar arrangement, to deliver oil or gas from the Properties without receiving payment at the time of or subsequent to delivery. Seller has not entered into and is not subject to any obligation to deliver gas or oil in the future for which payment has already been received ( e.g., a “forward” sale contract).

     (l) Preferential Purchase Rights and Consents . To Seller’s knowledge, except as set forth on Schedule 3.1(l) , there are no consents to assign requiring a third party to consent to the assignment of the Assets (“Consents”) or preferential purchase rights providing an option or right to purchase any of the Assets (“Preferential Rights”).

     (m) Capital Commitments . Except as set forth on Schedule 3.1(m) hereto, Seller has not paid, incurred or otherwise committed to, from and after the Effective Date, any expenditures in excess of $25,000 for any single operation, net to the interest of Seller, for any purpose, to include the drilling, completion, recompletion, sidetracking or rework of any Well on the Properties, the acquisition of other oil and gas properties, or the acquisition of seismic or other technical data, and no such expenditures are pending and unapproved.

     (n) No Material Adverse Change . Except for matters for which downward adjustments to the Purchase Price are prescribed pursuant to this Agreement, there has not been and will not be during the period between the Effective Date and the Closing Date any Material Adverse Effect with respect to the Assets.

     (o) Environmental Matters . Seller has not received any notification of any pending or threatened investigation, claim, penalty, or action by any Governmental Entity or other Person relating to the environmental condition of the Assets, and Seller has no knowledge that (i) there has been a release or threat of release of any hazardous substance (as the term “release” and “hazardous substance” are defined under Environmental Laws) on or from any of the Assets, or as a consequence of Seller’s operations or activities re